Meta share price: 20% gain in Meta shares due to record profits, better-than-expected projections, and the company’s first dividend.
Meta share price: After the firm reported a tripling of its fourth-quarter profit and paid out its first-ever dividend, Meta’s shares closed higher by more than 20% on Friday.
For Meta, revenue increased by 25% in the fourth quarter to $40.1 billion from $32.2 billion in the same period last year. This is the fastest growth rate recorded since mid-2021, and it provides more proof that the internet ad business is still expanding. In comparison to the previous year, Meta’s net income more than tripled to $14 billion from $4.65 billion.
According to the company’s prediction, first-quarter sales will fall between $34.5 billion and $37 billion. Analysts had projected $33.8 billion in revenue.
Meta share price: First-ever dividend
For the first time, Meta announced that it would pay out a quarterly dividend to investors. On March 26, the payout will be for 50 cents per share. This comes as cash and equivalents increased from $40.7 billion to $65.4 billion at the end of 2023. In addition, Meta declared a $50 billion share repurchase.
With Friday’s stock surge, Meta’s market capitalization increased by almost $200 billion, and its overall valuation surpassed $1.2 trillion.
The dividend announcement was welcomed by investors as evidence of the company’s maturity.
According to Ben Barringer, a technology analyst at Quilter Cheviot, it was a “symbolic moment that illustrates the remarkable journey Meta has taken since its difficulties in 2022.”
Barringer stated in an email that “Mark Zuckerberg is demonstrating that he wants to bring shareholders along with him and is highlighting that Meta is now a mature, grown-up business.”
Investor attention has also been drawn to Meta’s AI initiatives. With its LLaMA large language model, which competes with OpenAI’s GPT-4, which is supported by Microsoft, the company has a foothold in the AI space.
Although not yet on display, Barringer referred to Meta as a “closet AI winner” and stated that the company’s AI “will be better servicing advertisers and making the ads themselves more relevant for users.”
“Efficiency Year” pays off
CEO of Meta Zuckerberg strongly advocated for 2023 to be the company’s “year of efficiency.”
The corporation is spending billions of dollars a quarter on the metaverse, which has raised concerns from some investors. The fourth quarter saw sales in Meta’s Reality Labs division surpass $1 billion, but the virtual reality division lost $4.65 billion.
approximately the last year or two, Meta has been heavily slashing costs in reaction to shifting economic conditions, rising interest rates, and Apple’s iOS upgrade. This has included the elimination of approximately 20,000 employment.
Those actions seem to have been beneficial. Meta announced that its operating margin had doubled to 41% and that its expenses had dropped to $23.73 billion, an 8% annual drop.
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