Just days before Facebook’s 20th anniversary, Meta Platforms (META.O) announced its first dividend, opening a new tab. The company reported better-than-expected revenue and earnings thanks to strong ad sales during the holiday shopping season.
Following the bell, shares increased by over 14%, increasing the stock market worth of the corporation by over $140 billion and continuing a lengthy recovery that has seen Meta reach record highs for the very first time in almost two years.
But gains in the hours following the market close were enough to be more than five times the total value of Snap Inc. (SNAP.N), a social media competitor.
Meta, an early unicorn in the tech industry, announced a 50-cent dividend per share. Additionally, it was reported that an extra $50 billion had been authorized for share repurchases.
The social network behemoth is the very first of its internet generation’s company to pay out dividends, a watershed moment in a digital sector dominated by a small number of corporations for more than a decade.
It all started in 2004 from a college dorm room, but now it’s the largest social media firm in the world, bringing together over 3 billion users and changing the way people find trends, talk to their neighbors, and become involved in politics.
The owner of Instagram and WhatsApp has come under fire for allegedly inciting violence, violating user privacy, and neglecting a host of other problems as it has grown.
The day before the results were announced, Facebook CEO Mark Zuckerberg was summoned to testify before the US Senate on the topic of online child safety and was obliged to apologize to the parents of victims of sexual assault.
He expressed on Thursday in a post on Threads, another program owned by Meta; You’re never good when people say you are, and you’re never bad when they say you are bad. “Just keep building and doing good work over long periods.”
Thanks to investor enthusiasm for AI, Meta’s shares have been recovering steadily this past year after a collapse in 2022 erased more than three-quarters of the company’s one-time value.
Rebounding user growth along with digital ad sales have also contributed to its recovery. Additionally, since late 2022, it has cut more than 21,000 staff as part of its austerity effort.
In the fourth quarter, LSEG reported a 25% increase in revenue to $40.1 billion, which was more than the $39.2 billion experts had predicted.
LSEG data shows net income increased by over 200% to $14 billion. It surpassed the forecasts of $4.97 per share with $5.33 per share.
“This was one of the most impressive quarters – intrinsically and vs. expectations,” commented Mark Mahaney, an analyst at Evercore ISI.
Meta predicted first-quarter sales of $34.5–$37 billion, which was higher than the $33.8 billion predicted by Wall Street. They predicted that overall spending for 2024 will remain between $94 billion and $99 billion. These findings were announced Following the announcement of below-expected holiday season advertising sales by Alphabet (GOOGL.O).
More AI Investments In Metaverses:
Meta continues to invest billions in “metaverse” technologies and expanding its artificial intelligence infrastructure; investors have grown tolerant of this spending due to the company’s improved social media business. Executives reaffirmed their commitment to making significant investments in both sectors on Thursday.
According to Zuckerberg’s statement to analysts following the report, the company’s Reality Labs division, which focuses on metaverses, achieved record revenues of $1.1 billion in the fourth quarter because of the “strong sales” of the Quest device during the holiday season. According to LSEG data, investors were anticipating $804 million.
Reality Labs’ operating losses will “increase meaningfully” in 2024, according to Meta, who plans to invest more in AR and VR.
The ultimate aim is still to create engaging and immersive experiences with those technologies. However, Zuckerberg did mention that the new Ray-Ban smart glasses, which have an AI assistant already built-in, had been a surprising success with customers.
He said, “We thought we would have to build full displays and holograms” before smart glasses would gain popularity. “And now it’s quite possible that AI assistants built-in will be the killer app.”
While things are looking up, Reality Labs’ contribution to the company’s bottom line is still a pitiful 2.7%.
“Meta ended 2023 on an extremely strong note, with revenue soaring above analyst expectations,” commented Debra Aho Williamson, an independent tech analyst and former lead analyst at eMarketer.
“The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta.”