Google is closer to joining the $1,000-a-share club.
The search giant’s stock surged more than 8 percent, hitting a new high of $962, in late trading Thursday after the company reported results showing that its new ad pricing initiatives are paying off.
Google’s average ad prices have been declining in recent quarters amid a reluctance by advertisers to fork over as much for ads on mobile devices as they do for desktop computers.
Despite the shift by consumers to shop and search on smartphones and tablets, advertisers reasoned that those ads are smaller and therefore should cost less.
To offset the decline, Google announced a plan in February that forces marketers who buy ads on tablets to also buy ads on desktops. The new strategy also doesn’t let advertisers buy mobile-only campaigns.
While Wall Street worried that advertisers would be turned off by the pricing initiative, called “enhanced campaigns,” it appears to be working.
Revenue for the third quarter rose 12 percent from last year, to $14.9 billion. After subtracting fees paid to ad partners, revenue hit $11.9 billion, topping analysts’ estimates.
Net income rose 36 percent, to $2.97 billion, or $8.75 a share. Adjusted per-share earnings were $10.74, up from $8.87 a year earlier.
The blockbuster results suggest that the new strategy could prove to be a gold mine for Google, which is on track to dominate a whopping 33 percent of all digital ad spending worldwide this year, according to researcher eMarketer.
By contrast, Facebook is expected to account for less than 6 percent of global digital ad revenue.
Google CEO and co-founder Larry Page told investors and analysts that he won’t be on as many conference calls in the future as his executive suite has been demanding that he “prioritize my time.”
Page, who suffers from partially paralyzed vocal cords, spoke softly as he thanked his employees for their work.