Technology
Friday, February 2nd, 2024 5:49 pm EDT
Key Points
- Financial Performance Surge:
- Meta experienced a significant stock surge of over 20%, marking its third-best day ever, following the announcement of a tripling in fourth-quarter profit and the issuance of its first-ever dividend.
- Revenue for the fourth quarter rose by 25% to $40.1 billion, the fastest growth rate since mid-2021, providing evidence of a rebound in the online advertising market. Net income for Meta also tripled, reaching $14 billion from $4.65 billion a year earlier.
- The company’s first-quarter sales forecast, ranging from $34.5 billion to $37 billion, exceeded analysts’ expectations of $33.8 billion.
- Dividend Declaration and Share Buyback:
- Meta declared its first-ever quarterly dividend, set at 50 cents per share, to be paid on March 26. This decision follows the company’s significant increase in cash and equivalents from $40.7 billion to $65.4 billion by the end of 2023.
- Alongside the dividend, Meta announced a $50 billion share buyback program, contributing to a stock rally that added over $200 billion to Meta’s market capitalization, surpassing a total valuation of $1.2 trillion.
- Investors praised the dividend announcement as a symbolic moment, signifying Meta’s maturity and turnaround since facing challenges in 2022.
- Efficiency Initiatives and AI Focus:
- Meta CEO Mark Zuckerberg’s push for a “year of efficiency” in 2023 paid off, with the company reporting a doubling of its operating margin to 41%.
- Despite concerns about hefty investments in the metaverse, which cost billions of dollars quarterly, Meta’s strategic cost-cutting measures, including a reduction of over 20,000 jobs, have been successful.
- Investors are focusing on Meta’s developments in artificial intelligence, particularly its LLaMA large language model, positioning Meta as a “closet AI winner.” The AI is expected to enhance advertiser services and make ads more relevant for users, according to technology analyst Ben Barringer.
Meta shares experienced a significant surge, jumping over 20% and marking their third-best day ever as the company unveiled a remarkable tripling in fourth-quarter profit, accompanied by its inaugural dividend declaration. The reported revenue for Meta in Q4 soared by 25%, reaching $40.1 billion, reflecting the swiftest growth rate since mid-2021 and signaling a continued rebound in the online advertising market. Net income for the company more than tripled, reaching $14 billion compared to $4.65 billion a year earlier. For the first quarter, Meta anticipates sales in the range of $34.5 billion to $37 billion, surpassing analysts’ expectations of $33.8 billion. The announcement of Meta’s initial quarterly dividend, set at 50 cents per share on March 26, followed the company’s cash and equivalents surging to $65.4 billion from $40.7 billion at the end of 2023. Additionally, Meta revealed a $50 billion share buyback program.
This positive financial performance resulted in a stock rally on Friday that added over $200 billion to Meta’s market capitalization, propelling its total valuation past the $1.2 trillion mark. Investors welcomed the dividend declaration as a testament to Meta’s maturity and a reflection of its turnaround since facing challenges in 2022. Technology analyst Ben Barringer noted that this move by Meta’s CEO, Mark Zuckerberg, signifies the company’s transformation into a mature, grown-up business. Investors have also been closely monitoring Meta’s strides in artificial intelligence (AI), particularly its LLaMA large language model, which competes with Microsoft-backed OpenAI’s GPT-4. Barringer labeled Meta a “closet AI winner,” emphasizing that despite not being prominently showcased, Meta’s AI is expected to enhance advertiser services and make ads more relevant for users.
Highlighting 2023 as a “year of efficiency,” Meta CEO Zuckerberg emphasized the company’s commitment to streamlining operations. Despite investor concerns about substantial investments in the metaverse, which have incurred significant costs, Meta’s Reality Labs unit reported sales surpassing $1 billion in Q4. However, the virtual reality unit recorded losses of $4.65 billion. Meta’s strategic cost-cutting measures, including a reduction of over 20,000 jobs in response to economic changes, Apple’s iOS update, and rising interest rates, have proven successful. The company reported a doubling of its operating margin to 41%, and year-over-year expenses decreased by 8% to $23.73 billion. Overall, Meta’s robust financial results, coupled with its dividend initiation and share buyback, have positioned the company favorably in the eyes of investors, reflecting its resilience and adaptability in navigating a dynamic market landscape.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/02/02/meta-shares-surge-17percent-as-investors-cheer-first-ever-dividend.html
