Today: Facebook shares dive, then rise as analysts digest company's earnings report and executive comments. Also: Earnings affect several other Silicon Valley stocks, Apple (AAPL) falls ahead of iPad Air arrival.
The Lead: Analysts like Facebook, stock turns around
After confusion reigned in the wake of Facebook's earnings report Wednesday afternoon, the Menlo Park social network's stock continued to jump around in heavy trading Thursday before settling into a daily gain as analysts said conflicting views on the company's future should be more straightforward.
Facebook's actual report was positive for the company, as it showed continuing strong revenue and mobile growth, but the company's conference call planted the seeds of doubt in investors' minds. Facebook executives told analysts that they would not continue to increase the number of ads in users' feeds, which had been a big part of Facebook's ability to grow revenues, and admitted that young teenagers seem to avoiding the service.
Facebook Chief Financial Officer David Ebersman said Wednesday that the social network "did see a decrease in daily users, specifically among younger teens," though he attempted to couch that statement by saying that overall teen usage was "stable" and the decrease was "of questionable significance."
After late trading pushed shares to record prices -- the highest price paid was $57.98, well above Facebook's all-time high of $54.83 -- but conference call comments drove prices back down, leading to Facebook opening 3.6 percent lower than Wednesday's closing price.
Soon, however, analysts notes that were kind to Facebook began to take hold, with Topeka Capital Markets analyst Victor Anthony noting that the unnecessary weakness created a buying opportunity.
"Investor enthusiasm waned after the CFO's comments that ad impressions are unlikely to increase and younger teens have decreased their daily usage of Facebook. We think the negative read on those comments are excessive and recommend buying the stock on a pullback," he wrote in a note Thursday morning, which also raised his price target from $60 to $63.
Sterne Agee analyst Arvind Bhatia said he believed Facebook executives were simply being conservative in order to keep "Street estimates from getting too far ahead," and sees positive movement in Facebook's future, reiterating a "Buy" rating and $58 price target.
"We see Instagram monetization and introduction of video ads on Facebook as near-term growth drivers. Additionally, Graph Search holds promise longer-term," Bhatia wrote.
The only downgrade tracked by Barron's was from BMO Capital analyst Daniel Salmon, who was unhappy Facebook did not mention its social TV efforts and cut his rating, but maintained a $50 price target.
With positive vibes emanating from analyst notes, the stock turned around Thursday, moving as high as $52 before closing with a 2.4 percent gain at $50.21 with a volume of trades nearly three times Facebook's average.
SV150 market report: Apple and Google stall, Wall Street drops
Overall, stocks slipped slightly while closing out a scary but positive October, while Silicon Valley stocks performed a bit better than the main Wall Street indexes despite little help from Apple and Google (GOOG).
Apple dropped 0.4 percent to $522.70 after confirming problems with a new product offering for a second consecutive day. After admitting Wednesday that manufacturing defects were affecting the battery life in some iPhone 5S units, the Cupertino company said Thursday that its new 13-inch MacBook Pro laptops have keyboards and trackpads that can become unresponsive. Apple's newest offering will hit stores Friday morning, when customers get their first crack at the iPad Air, Apple's refreshed full-sized tablet; for live coverage from Silicon Valley Apple stores, go to www.siliconvalley.com.
Google basically treaded water -- shares gained 16 cents to $1,030.58 -- while showing off its newest consumer device, the Nexus 5 smartphone. The new phone, manufactured by LG, will arrive with the newest version of Google's mobile operating system, named KitKat, which Google executive Sundar Pichai said would work on lower-cost smartphones as well. Google also allowed one of its engineers to take leave so he can help solve the technical issues of the federal government's new health care website, heathcare.gov, an effort that will also employ Oracle (ORCL) engineers. Oracle dropped 0.1 percent to $33.50 as investors voted against CEO Larry Ellison's massive pay package at the Redwood City software company's annual meeting.
SunPower (SPWRA) took a dive after its quarterly earnings report showed improvement thanks to stronger demand for solar panels, dropping 5.2 percent to $30.20, but recovered somewhat in late trading after larger rival First Solar also released a strong report. Tesla Motors (TSLA) gained 0.5 percent to $159.94 while some of its biggest fans celebrated the completion of the Palo Alto company's West Coast supercharger network, and the most volatile stock around, Netflix (NFLX), increased 1.4 percent to $322.48.
Lesser-known Silicon Valley companies affected by their earnings reports contributed the big swings in the SV150 on Thursday, with ShoreTel (up 29.8 percent to $7.93), Power Integrations (up 11.4 percent to $57.28) and Thoratec (up 9.8 percent to $43.21) on the positive side; and SGI (down 16.7 percent to $12.76), Jive Software (down 14.2 percent to $10.91), Rovi (down 11.7 percent to $16.75) and JDS Uniphase (down 11.3 percent to $13.09) receiving the negative end of the stick.
The SV150 index of Silicon Valley's largest tech companies: Down 1.11, or 0.08 percent, to 1,403.43
The tech-heavy Nasdaq composite index: Down 10.91, or 0.28 percent, to 3,919.71
The blue chip Dow Jones industrial average: Down 73.01, or 0.47 percent, to 15,545.75
And the widely watched Standard & Poor's 500 index: Down 6.77, or 0.38 percent, to 1,756.54
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.