Meta’s stock saw a remarkable surge of over 20% on Friday following the release of its fourth-quarter earnings report, where it revealed a substantial increase in profits and declared its inaugural dividend.
The company’s revenue for the fourth quarter soared by 25%, reaching $40.1 billion, compared to $32.2 billion in the previous year, marking the highest growth rate since mid-2021.
Meta’s net income also exhibited a remarkable threefold rise, surging to $14 billion from $4.65 billion in the prior year.
In a further show of confidence in its financial stability, Meta announced its intention to distribute a quarterly dividend of 50 cents per share starting on March 26.
This decision comes on the heels of Meta’s cash and equivalents swelling from $40.7 billion to $65.4 billion by the end of 2023.
Additionally, Meta unveiled a share buyback program amounting to $50 billion, further enhancing investor sentiment.
The extraordinary stock rally on Friday resulted in an increase of more than $200 billion in Meta’s market capitalization, pushing its total valuation beyond $1.2 trillion.
Investors hailed the dividend announcement as an indication of Meta’s maturation.
Ben Barringer, a technology analyst at Quilter Cheviot, described it as a “symbolic moment” and emphasized Meta’s transformation from its struggles in 2022, stating, “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.”
Investor attention has also been drawn to Meta’s advancements in artificial intelligence, particularly its LLaMA large language model, which competes with Microsoft-backed OpenAI’s GPT-4.
Barringer lauded Meta as a “closet AI winner” and anticipated that its AI capabilities would enhance the effectiveness of advertising and make ads more relevant to users.
CEO Mark Zuckerberg had prioritized 2023 as the “year of efficiency” for Meta, a strategy that has garnered success.
Despite substantial investments in the metaverse, costing billions each quarter, Meta’s Reality Labs unit reported sales exceeding $1 billion in the fourth quarter.
Nevertheless, the virtual reality unit incurred losses of $4.65 billion.
Meta’s diligent cost-cutting measures, including the reduction of over 20,000 jobs in response to various economic challenges, Apple’s iOS updates, and rising interest rates, have yielded significant results.
The company’s operating margin doubled to 41%, and expenses decreased by 8% year-over-year, reaching $23.73 billion.