Facebook's earnings: It's all about mobile

Facebook has gone from total loser to stock stud in three months. On Wednesday, the social network will need to show significant growth to its mobile ads business to keep investors interested.

But what now?
Facebook is entering Wednesday's earnings report in a position of the strength.

The social network successfully mitigated sizable lock-up expirations in October, November, and December, which added 1.2 billion shares to the public pool. The company is also now in its seventh month of offering Sponsored Stories, or status updates from brands who pay to promote their stories in members' News Feed, which means it should be able to show dramatic revenue growth from the desktop- and mobile-friendly units. Facebook also pushed its Gifts products out to all U.S. members before the holiday, ramped up its efforts to allow developers to pitch people on their applications through mobile app install ads, and started charging to deliver messages to strangers.

Some of these products may each only contribute between $20 million to $100 million to Facebook's bottom line, Pachter said, but so long as Facebook shows that the percentage of advertising revenue derived is growing on mobile, investors will be pleased. Pachter predicts that Facebook will report 17 percent of advertising revenue from mobile products in the fourth quarter.