Meta Platforms’ Stock Surges Over 20% on Strong Earnings, Share Repurchase, and Dividend Strategy

Meta Stock

Meta Platforms (NASDAQ:META) witnessed a significant surge in its shares, soaring over 20% in early Friday trading. The surge followed Meta’s announcement of better-than-expected earnings and guidance, coupled with the introduction of new initiatives for shareholder returns.

For the fourth quarter, Meta reported an adjusted earnings per share (EPS) of $5.33, surpassing analysts’ expectations of $4.94, and posted a revenue of $40.11 billion. This exceeded the projected revenue of $39.01 billion. In the same quarter the previous year, the company had reported revenue of $32.2 billion.

In a move welcomed by investors, Meta increased its stock buyback authorization by $50 billion and unveiled a quarterly dividend of $0.50 per share. For the current quarter, the company anticipates revenue between $34.6 billion and $37 billion, outperforming analysts’ predictions of $33.6 billion.

Meta’s advertising revenue for the fourth quarter reached $38.7 billion, surpassing expectations of $37.8 billion. The company reported a daily active user base of 2.11 billion on Facebook, beating Wall Street’s forecast of 2.07 billion.

Despite these positive outcomes, Meta’s Reality Labs division, responsible for bringing the metaverse vision to life, continued to incur losses, amounting to $4.65 billion. However, this loss exceeded expectations on revenue, reaching $1.07 billion against an anticipated $812 million.

Investors, previously focused on Meta’s Reality Labs, have shifted attention to increased investments in generative AI. In January, Meta’s founder and CEO, Mark Zuckerberg, revealed the company’s long-term strategy to develop and open-source general artificial intelligence capable of versatile learning and understanding.

Looking ahead to 2024, Meta projects total expenses between $94 billion and $99 billion, citing rising payroll costs due to the recruitment of staff in higher-cost, technical roles to support its AI endeavors.

In 2023, restructuring charges, including severance and facilities consolidation, amounted to $3.45 billion. The company’s headcount as of December 31, 2023, stood at 67,317, reflecting a 22% reduction compared to the prior year.

Over the past 12 months, Meta’s shares have experienced a remarkable 121% surge, outperforming industry giants like Apple (NASDAQ:AAPL), Google (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN). In January, Meta’s market capitalization once again surpassed the $1 trillion mark.

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About the author: Stephanie Bédard-Châteauneuf has over seven years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, market news, and personal finance. She has an MBA in finance.