(Reuters) - Shares of Facebook Inc were set to open 7 percent lower on Thursday as a surge in fourth-quarter mobile advertising revenue failed to live up to Wall Street's high expectations.
Three brokerages downgraded the stock of the No. 1 social network, which has struggled to develop a full-fledged mobile advertising business.
Facebook has long established itself as one of the most important websites, but investors have worried that until the company's mobile advertising strategy takes off, revenue growth will remain shaky.
The company reported a better-than-expected fourth-quarter profit on Wednesday and said its mobile advertising revenue doubled to $306 million, suggesting it was making inroads into handheld devices such as smartphones and tablets.
Investors were looking for at least $350 million in mobile advertising revenue, Piper Jaffray analyst Gene Munster said in a note to clients.
"While the trajectory of mobile growth may not be as steep as some investors were hoping, the theme of mobile as the future of Facebook remains intact," he said.
BMO Capital Markets analyst Daniel Salmon, who downgraded the stock to "market perform" from "outperform", however said Facebook's 2013 stock performance would not be dictated by its ability to generate mobile ad dollars.
He said new catalysts were necessary to drive Facebook's stock price up.
Facebook's stock, which has lost over a quarter of its value since its botched debut in May, were down at $29.08 in premarket trading. The shares closed at $31.24 on the Nasdaq on Wednesday.
(Reporting by Neha Alawadhi in Bangalore; Editing by Saumyadeb Chakrabarty)