Image Credit: Yves Herman
Meta Platforms, the parent company of Facebook, announced its first dividend and reported strong profits on Friday, sending its shares soaring to a new all-time high and increasing the company’s stock market value by more than $214 billion.
On track for its third largest daily percentage increase since its Wall Street debut in 2012, Meta’s (META.O) shares surged as much as 23% and was last up 21.4%. More than $1.2 trillion is now worth more than its stock on the market.
Meta announced a 50 cent quarterly dividend and authorized an extra $50 billion in share repurchases late Thursday, just days before Facebook’s 20th anniversary. Even though dividends are often linked to established, slow-growing businesses, Meta’s is the fourth offered by the most valuable tech companies on Wall Street, joining Apple (AAPL.O), Microsoft (MSFT.O), and Nvidia (NVDA.O).
The decision to pay a dividend indicates that the corporation is making efforts to restore its credibility and get greater respect. According to Dan Coatsworth, an investment analyst at AJ Bell, the sum being paid is merely a symbolic gesture. Approximately 350 million Meta Class A and Class B shares are owned by CEO Mark Zuckerberg, who stands to get a substantial payout from the dividend scheme. The co-founder of Facebook might earn almost $175 million quarterly.
Meta Platforms experiences a significant surge in growth due to a rebound in demand for ads
Last year, the S&P 500 (SPX) rallied by 24% due to optimism about AI’s potential; companies like Meta, Nvidia, Microsoft, and Broadcom (AVGO.O) just reached record highs. After Friday’s gains, Meta’s 2024 profits currently stands at 35%. Revenue for the fourth quarter increased by 25% as the largest social media firm in the world reported robust ad revenues and a return to user growth. Additionally, it outpaced analysts’ expectations for sales for the current quarter.
After cutting almost 21,000 workers since late 2022, Meta was able to treble its net income to $14.02 billion thanks to a combination of surging revenue and an 8% decline in expenditures and expenses.
“The ‘Year of Efficiency’ has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue,” stated Jasmine Enberg, lead analyst at Insider Intelligence. Even though Meta’s dividend isn’t much compared to other firms, it can nevertheless interest investors, especially those who invest in dividend-focused exchange-traded funds.
After Friday’s stock surge, Meta’s dividend yield is approximately 0.4%. According to LSEG, Apple has a dividend yield of approximately 0.5%, Microsoft’s is 0.7%, and Nvidia’s is less than 0.1%.
“This will start attracting investors who really do look for dividends and more steady income,” commented Brian Jacobsen, Chief Economist at Annex Wealth Management.
Over the last decade, Meta has invested billions to increase its processing power for Ray-Ban smart glasses and the generative AI features it is integrating into social media platforms like Facebook, Instagram, and WhatsApp.
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