The 10 Days That Changed Mobile Stocks

NEW YORK ( TheStreet) -- Call it the 10 days that have shaken up mobile stocks.

It all started with last Wednesday's earnings report from Facebook ( FB), the granddaddy of social media stocks, but now (more than ever) a mobile stock. Its results were so strong and unexpected, they seemed to jolt all of Wall Street out of a year-long sleep they'd fallen into after the May 2012 initial public offering.

Mobile revenue jumped to 41% of total revenue from the prior quarter in the low 30%. This was much stronger than people had expected. The revenue beat was by a significant amount and show a reacceleration in growth -- finally -- after consistently slowing post-IPO.

Facebook also presented that it had full penetration with teens, rather than a waning interest. It pointed to the fact that Instagram was continuing to grow like a weed, without any monetization yet.

The company was also able to show that 70% of monthly active users were daily active users. That's loyalty for you.

These positive results immediately seemed to simultaneously shock and then transfix Wall Street. The stock immediately jumped 20% in the afternoon after-hours session following their earnings release. By the following morning, the stock was up 32%. Ten days later, it's up about 44% since prior to the release -- a huge release.

One trader told me Thursday: "I was the biggest skeptic on Facebook prior to that release -- but the quarter was so good. I bought immediately. The stock is also really under-owned institutionally. I bought more right after the quarter and now I'm a convert."

This is a sentiment that I believe is much more widely held today as a result of last week's earnings report. But it's now been supplemented with a bunch more positive data points from others that Mobile has become a money-maker for many.

Yelp ( YELP) had a monster quarter which propelled the stock 25% yesterday and it's up again today. Jim Cramer said on CNBC Thursday that the company had validated its model and should be bought by Apple ( AAPL) for $75 per share.

LinkedIn ( LNKD) also accelerated its growth again in the quarter, which caused the stock to jump 8% to $230 Friday, with several analysts taking their price targets up to $250.

MercadoLibre ( MELI) is up 10% to all-time highs after its profit grew 18% and gross merchandise value grew much faster than expected.

Trulia ( TRLA) hit all-time highs Thursday for beating on the top and bottom line for the real estate listings company.

Zillow ( Z), Trulia's bigger rival, also hit new highs in sympathy. Its earnings don't come out until next week, but investors are also expecting big things. The stock has risen 45% in the last month.

What do all these stocks have in common? They all rely on mobile for their growth.

More important, they've all figured out how to make money from mobile through either ads, placements fees, transaction fees, listings fees, or through selling profiles of their members to interested parties.

Has it changed the world of mobile stocks forever? It sure seems so.

The biggest inflection point to come for mobile stocks may be when we finally see mobile cost per clicks (CPCs) actually pass desktop CPCs. That's something that would have seemed like crazy talk a year (or even 6 months) ago, but it is possible to think of that today.

Why?

Well, if there's one message to take from all these companies, it is this: Money will follow where the users are, and users are moving en masse to mobile.

That's a phrase that Marissa Mayer at Yahoo! ( YHOO) has been saying for months. It hasn't really translated into any meaningful revenue for the company yet, but the logic is sound and all these mobile companies are showing that it's true.

As the world moves to mobile, the same advertisers, job hirers and others who had to reach people on desktop have to do the same in mobile. The economics of reaching those people will move in fits and starts but it will eventually transition almost completely over from desktop to mobile.

The former kings of the Web may or may not make the crossing of the chasm to mobile. But one thing's for sure after these last 10 days: The upstarts are figuring out how to make money in this brave new mobile world, and Wall Street is rewarding them, big time.

At the time of publication the author was long AAPL and YHOO.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Eric Jackson is founder and Managing Member of Ironfire Capital and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd. In January 2007, Jackson started the world's first Internet-based campaign to increase shareholder value at Yahoo!, leading to a change in CEOs in 2007. He also spoke out in favor of Yahoo!'s accepting Microsoft's buyout offer in 2008. Global Proxy Watch named Jackson as one of its 10 "Stars" who positively influenced international corporate governance and shareowner value in 2007.

Prior to founding Ironfire Capital, Jackson was President and CEO of Jackson Leadership Systems, Inc., a leadership, strategy, and governance consulting firm. He completed his Ph.D. in the Management Department at the Columbia University Graduate School of Business in New York, with a specialization in Strategic Management and Corporate Governance, and holds a B.A. from McGill University.

He was previously Vice President of Strategy and Business Development at VoiceGenie Technologies, a software firm now owned by Alcatel-Lucent. In 2004, Jackson founded the Young Patrons' Circle at the Royal Ontario Museum in Toronto, which is now the second-largest social and philanthropic group of its kind in North America, raising $500,000 annually for the museum. You can follow Jackson on Twitter at www.twitter.com/ericjackson or @ericjackson.

You can contact Eric by emailing him at eric.jackson@thestreet.com.

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