Meta Stock Surges 20% on Strong Earnings, Buyback, and Dividend Plan

Meta Stock

Meta Platforms (NASDAQ:META) experienced a remarkable surge of over 20% in its stock on Friday following the release of better-than-expected earnings, solid guidance, and the announcement of new shareholder return initiatives. The rally positioned the company to potentially add more than $200 billion to its market cap, setting a potential stock market record.

With shares trading around $475 on Friday, Meta’s market cap exceeded $1.2 trillion, showcasing a significant recovery from its lows in 2022 when the stock fell to as low as $90.

In the fourth quarter, Meta reported adjusted earnings per share (EPS) of $5.33 on revenue of $40.11 billion, surpassing analysts’ expectations for adjusted EPS of $4.94 on revenue of $39.01 billion. The company’s advertising revenue reached $38.7 billion, beating expectations, and it reported 2.11 billion Facebook daily active users, surpassing the anticipated 2.07 billion.

As part of its shareholder return initiatives, Meta increased its stock buyback authorization by $50 billion and initiated a quarterly dividend of $0.50 per share. The company’s positive financial performance and shareholder-friendly initiatives contributed to the significant jump in its stock price.

While Meta’s Reality Labs division, focused on the metaverse vision, reported a loss of $4.65 billion, up from the previous year, it surpassed revenue expectations, reaching $1.07 billion compared to an anticipated $812 million.

Investors have been closely monitoring Meta’s developments in generative AI, with CEO Mark Zuckerberg expressing a long-term strategy to develop general artificial intelligence and make it open source. Generative AI, capable of thinking and learning like a human across various concepts, has become a focal point of Meta’s efforts.

Looking ahead, Meta expects total expenses in 2024 to range between $94 billion and $99 billion, emphasizing increased investments in payroll costs as the company expands its workforce in higher-cost technical roles amid its AI-focused initiatives.

Despite the challenges and expenses, Meta’s stock has been on an impressive streak over the last 12 months, surging 121% and outperforming major tech counterparts like Apple (NASDAQ:AAPL), Google (NASDAQ:GOOG), Microsoft (NASDAQ:MSFT), and Amazon (NASDAQ:AMZN). In January, Meta’s market capitalization once again exceeded the $1 trillion mark.

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