Facebook Inc. doubled its mobile advertising revenue in the fourth quarter, a sign that the No.1 social network is seeing early success in expanding onto handheld devices as more of its users migrate to smartphones and tablets.

Investors want to see evidence that CEO Mark Zuckerberg’s eight-year-old company is delivering on promises to develop a full-fledged mobile advertising business, a challenge facing many of today’s technology leaders including Google Inc.

But the growth trailed some of Wall Street’s most aggressive estimates. Shares of Facebook were down roughly three per cent at $30.21 (€22.3) in after-hours trading on Wednesday, regaining ground after falling more than eight per cent immediately after the numbers were released.

Mobile revenue estimates among some analysts and investors were unreasonably high, said Sterne, Agee & Leach analyst Arvind Bhatia.

“As a result the stock was set up for disappointment,” he said. Overall, he said, Facebook’s results were encouraging.

The company’s overall advertising business grew at its fastest clip since before its May initial public offering, helping the company’s revenue expand 40 per cent and surpass Wall Street targets.

Facebook has rolled out a wide variety of new services in recent months as the company seeks to stay ahead in the fast-moving web market and to convince Wall Street that it can turn its audience of more than one billion users into a sustainable business.

Zuckerberg said the company plans to spend heavily to recruit talent in 2013 as the company pushes forward with new product development, particularly “mobile-first” services.