• by Erik Sass , Staff Writer @eriksass1, October 24, 2012

Finally some good news for Facebook: a favorable third quarter earnings report, including promising growth in mobile advertising revenues, has buoyed the stock price for the world’s dominant social network by $4.05, or over 20%, to $23.55 at the time of writing. But there’s still plenty of skepticism out there regarding the company’s valuation.

Total advertising revenues in the third quarter came to $1.26 billion, with $1.09 billion coming from advertising. Meanwhile mobile traffic to the network is booming, currently accounting for 600 million visitors, compared to 376 million last year. Mobile visitors also use Facebook more frequently, according to founder and CEO Mark Zuckerberg: “Somebody who uses only our desktop product has only a 40% likelihood of using Facebook on a given day, but someone who uses mobile has a 70% likelihood of using Facebook on a given day.”

Turning to company’s strategy for mobile advertising, Zuckerberg laid out a plausible approach which differentiates Facebook’s mobile strategy from its desktop strategy. Where desktop ads are delivered alongside the Facebook experience, “on mobile, we believe ads will be more like TV -- high quality and integrated into the experience rather than off to the side.” Among the new mobile ad offerings are paid promotions for mobile apps “to help developers increase discovery of their apps.” Chief operating officer Sheryl Sandberg also touted the success of mobile ads appearing in users’ News Feeds, as well as the potential of paid search ads and Mobile App-Install Ads mentioned by Zuckerberg. And mobile ads are already producing some substantial revenues: “Today, after just six months of ramping up our mobile ad business, we’re already at a point where 14% of our ad revenue this quarter is from mobile. That’s about $150 million.”

Zuckerberg also pointed to some new products and platforms that aren’t mobile-specific, including the Facebook Exchange and Custom Audiences, which allow more precise targeting of users, and Facebook Gifts, which could boost virtual goods revenues.

However, new threats are also appearing in the ever-shifting social landscape. One pressing issue is the decline of revenues from social gaming, principally Zynga, whose contributions to Facebook’s total revenues fell 20% (Zynga’s own stock price remains mired around $2.22 at the time of writing, reflecting investor fears that early successes like FarmVille will be harder to replicate with the scale and frequency needed to drive long-term growth).

Indeed, many analysts expressed continuing skepticism about Facebook’s valuation. Even with solid revenue growth and promising developments in mobile, the simple fact remains that the company entered the market with an IPO price which was far too high; on this point the Wall Street Journal reminds readers that Facebook’s ratio of stock price to earnings at the time of the IPO was higher than 99% of the S&P 500.