Key
Points |
| #Meta |
· Meta
shares jumped on Friday after profit tripled in the fourth quarter and the
company issued its first-ever dividend.
· Revenue
rose 25% in the quarter for Meta, marking the fastest rate of growth for any
period since mid-2021 as the online ad market rebounded.
· Investors
praised Meta’s decision to issue a dividend, a rare step for a high-growth
technology company.
Meta
shares closed up more than 20% on Friday after the company reported a tripling
in fourth-quarter profit and issued its first-ever dividend.
Revenue
rose 25% in the fourth quarter for Meta to $40.1 billion from $32.2 billion a
year earlier. That’s the fastest rate of growth for any period since mid-2021,
and offers further evidence that the online ad market is continuing to rebound.
Meta’s net income more than tripled, to $14 billion from $4.65 billion a year
earlier.
The
company is forecasting first-quarter sales to be in the range of $34.5 billion
to $37 billion. Analysts were expecting revenue of $33.8 billion.
First-ever
dividend
Meta
said it would pay investors a quarterly dividend for the first time, announcing
a payout of 50 cents a share on March 26. That comes after cash and equivalents
swelled to $65.4 billion at the end of 2023, from $40.7 billion a year earlier.
Meta also announced a $50 billion share buyback.
The
stock rally on Friday added more than $200 billion to Meta’s market cap and
pushed its total valuation past $1.2 trillion.
Investors
praised the dividend announcement as a sign of the company’s maturity.
Ben
Barringer, technology analyst at Quilter Cheviot, said it represented a
“symbolic moment and indicates what a turnaround story Meta has been on since
its struggles in 2022.”
“Mark
Zuckerberg is showing that he wants to bring shareholders along with him and is
highlighting that Meta is now a mature, grown-up business,” Barringer said in
emailed comments.
Investors
have also been focusing on Meta’s moves in artificial intelligence. The company
has a stake in the ground in AI with its LLaMA large language model, a
competitor to Microsoft-backed OpenAI’s GPT-4.
Barringer
called Meta a “closet AI winner” and said the company’s AI, while not out in
show, “will be better servicing advertisers and making the ads themselves more
relevant for users.”
‘Year
of efficiency’ pays off Meta CEO Zuckerberg made a big push for 2023 to be a
“year of efficiency” for the company.
Some
investors have questioned the company’s hefty investments in the metaverse,
which is costing the company billions of dollars a quarter. Sales in Meta’s
Reality Labs unit passed $1 billion in the fourth quarter, but virtual reality
unit recorded $4.65 billion in losses.
Meta
has been deep in cost-cutting mode, including cutting over 20,000 jobs over the
last year or so, in response to changes in the economic environment, Apple’s iOS
update and rising interest rates.
Those
steps appear to have paid off. Meta reported a doubling of its operating margin
to 41%, and the company’s expenses decreased 8% year over year to $23.73
billion.
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