Feb 1, 2024 - Business

Meta stock soars after declaring first quarterly dividend

Meta logo on a building

Photographer: Jason Alden/Bloomberg via Getty Image

Shares in Meta skyrocketed more than 12% in extended trading Thursday after the tech giant said it declared its first-ever quarterly dividend of $0.50 per share. It also authorized a $50 billion stock buyback to increase the value of its shares.

Why it matters: The moves are a sign of maturity for Meta, which has grown to become one of the most powerful companies in the world since it went public in 2012.

  • Meta's success also signals to investors wary of heavy investments in the metaverse and artificial intelligence that Meta can afford to take risks.

Details: Meta beat Wall Street expectations on both its top and bottom lines for the fourth quarter, a signal that its 2023 momentum will likely continue through the beginning of 2024.

  • Over the past year, Meta's ad business has been able to recover from a major slowdown in 2022, thanks to investments in artificial intelligence that make it easier for small and medium-sized business advertisers to buy and optimize their ad campaigns across Meta's apps.
  • Meta's stock reached an all-time high earlier this week, reversing the post-pandemic drubbing it took beginning in 2022.

Be smart: Meta also surpassed investor expectations on user growth, a strong signal that the firm still has room to grow, despite surpassing an unprecedented 3 billion monthly active users last August.

  • The company now boasts more than 2.11 billion daily active users across its apps, like Instagram, Facebook and Whatsapp, and more than 3.07 monthly active users worldwide.

By the numbers, via CNBC:

  • Earnings were $5.33 per share. That may not compare with the $4.96 per share expected by LSEG.
  • Revenue was $40.1 billion. That may not compare with the $39.18 billion expected by LSEG

Zoom in: Daily active users (DAUs) were 2.11 billion vs. 2.08 billion expected, according to StreetAccount.

  • Monthly active users (MAUs) were 3.07 billion vs. 3.06 billion expected, according to StreetAccount.

The big picture: Meta's business performance continues to outweigh any regulatory concerns from investors.

  • Meta CEO Mark Zuckerberg was one of five Big Tech CEOs who testified in front of the Senate Judiciary Committee Wednesday over protecting children online.
  • He prompted the hearing's most viral moment when he delivered an impromptu apology to the families of child victims of online harm who attended the hearing in person.

What to watch: Expenses at the company dropped 8% year-over-year, thanks to steep headcount reductions the firm made last year to become more efficient.

  • Still, the company continues to lose billions of dollars on its Reality Labs segment, which produces virtual and augmented reality products.
  • Meta said it expects operating losses to "increase meaningfully year-over-year" next quarter due to ongoing product development efforts in augmented and virtual reality.

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