Facebook (Nasdaq: FB), the biggest social networking site, posted a record surge after reporting sales that topped analysts’ estimates, allaying concerns over its ability to make money from mobile ads.

Facebook advanced 23 percent to $23.94 early Wednesday in New York. Through Tuesday, the stock had fallen 49 percent since an initial public offering in May.

On Tuesday, Facebook said that nearly $153 million of its $1.26 billion revenue came from mobile advertisements. The rate of advertising revenue growth also accelerated since the second quarter.

The surge is by far the stock’s biggest one-day gain since Facebook went public on May 18. The stock is still down 37 percent from its $38 initial public offering price.

Facebook Gets Upgrade

In his upgrade of Facebook, Citi Investment Research analyst Mark Mahaney said that for the first time since the IPO, investors see a reasonably priced stock combined with accelerating growth at the company. He raised his rating to “Buy” from “Neutral” and increased his target price to $35 from $30.

The analyst noted that advertising revenue grew at a faster pace at Facebook at a time when rival Google Inc. saw a slowdown. Google surprised investors last week with weaker-than-expected earnings report that showed its ad revenue growing at the slowest pace in three years.

Ads delivered to people on mobile devices generated about $150 million during the quarter, or 14 percent of all advertising revenue. That compares with about $10 million in the second quarter, according to an estimate by Brian Wieser, an analyst at Pivotal Research Group.

Chief Executive Officer Mark Zuckerberg is showing early success with the more than a half dozen services unveiled since March that are designed to help businesses woo social-network users on tablets and smartphones.

“Mobile problem? What mobile problem?” Wieser said. “It’s nothing short of remarkable.”

Sales rose 32 percent to $1.26 billion during the third quarter. That compares with the average estimate of $1.23 billion, according to data compiled by Bloomberg. That also matched the growth rate of the second quarter, snapping a streak of slowing sales increases.

Profit excluding certain costs was 12 cents a share in the third quarter. That compares with the average estimate of 11 cents a share. Facebook had a net loss of $59 million, or 2 cents a share, compared with profit of $227 million, or 10 cents, reflecting a larger provision for income taxes.

Moving ‘Quickly’

The company had lost more than $40 billion in market value since holding the largest Internet IPO on record as investors fretted that it won’t quickly ramp up mobile-related sales.

Arvind Bhatia, an analyst at Sterne Agee & Leach Inc. in Dallas, had predicted that only 5 percent of Facebook’s ad sales would come from mobile.

“They still have a long way to go to prove that this is sustainable — they can keep going in this direction, but what it shows is that things can move relatively quickly,” he said.

With mobile-marketing making gains, the number of ads being shown kept pace with the growth in users during the quarter, Facebook Chief Financial Officer David Ebersman said during a call with analysts yesterday. Ad prices increased 7 percent, while the number of ads delivered increased 27 percent.

The company’s mobile growth prospects are promising as users show more engagement on wireless devices than on desktop computers, CEO Zuckerberg said on the call. The company may eventually make money more easily from mobile ads than those on desktops, based on time spent on the service by users, he said.

‘Misunderstood’ Mobile

“Our opportunity on mobile is the most misunderstood aspect of Facebook today,” he said. “Most people underestimate how fundamentally good the trend toward mobile can be for Facebook.”

About 60 percent of Facebook’s more than 1 billion members are accessing the service on mobile, compared with about 47 percent a year earlier. Since March, Facebook has introduced a range of tools aimed at wringing sales of mobile ads.

“We’ve said we are increasing our investment in monetization and we’ve also said that we are increasingly focused on mobile,” Chief Operating Officer Sheryl Sandberg said in an interview. “The quarter represents real progress on both of those fronts.”

Still, in its first year in the running, Facebook is likely to rank only sixth in U.S. mobile advertising for 2012, with just 2.8 percent share of the market, according to EMarketer Inc. Google Inc., which is No. 1, is estimated to hold 55 percent, up from 52 percent in 2011.

‘Early Stages’

Earlier this year, Facebook rolled out Sponsored Stories as its inaugural mobile ad service, letting businesses promote content that a user’s friends have signaled they “like” or interacted with in some way. The social network then added Promoted Posts, which let companies highlight marketing messages to their fans and friends of fans.

“Mobile’s a great opportunity to grow our users, to grow engagement and to grow monetization,” Sandberg said. “We’re at the very early stages.”

Ad revenue grew 36 percent during the quarter to $1.09 billion. The company’s revenue from payments and other fees, which include sales of virtual goods in games, rose 13 percent.

Lockups Expire

“We had a solid performance in terms of user growth and our financial results,” Ebersman said in an interview. “Our business continues to grow globally.”

Results in Europe were dragged down by macroeconomic weakness there, he said.

The company has tried to improve the effectiveness of its ad tools that help better target users. It has rolled out the “Facebook Exchange,” letting companies tailor ads on Facebook based on their Web-browsing history outside of the service. The company also said it would roll out a service that lets advertisers use data they’ve collected from their own customers, such as e-mails and phone numbers, to target those users on Facebook, using a software tool that is designed to protect the members’ identities.

While the company is investing in its business, its shares could come under pressure in the coming weeks as more shares are freed up for potential trades, Wieser said. Still, the report yesterday could prompt some shareholders to keep their stock longer, he said.

(Bloomberg and The AP contributed to this report.)