Days before Facebook, the company’s flagship social network, turns 20, Meta Platforms opens a new tab and declares its first dividend.
It also reports revenue and profit that exceeds forecasts thanks to strong ad sales during the holiday shopping season.
After the bell, shares shot up more than 14%, continuing a lengthy rally that saw Meta reach new highs in recent weeks for the first time in more than two years.
The corporation saw a more than $140 billion increase in its stock market capitalization. The rise alone more than quintupled the value of smaller rival Snap Inc., a social media company, opens new tab.
Meta, one of the tech sector’s original unicorns, said the dividend would be 50 cents per share. It also announced it had authorized an additional $50 billion in share repurchases.
“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta CEO Mark Zuckerberg said in a prepared statement.
Revenue rose 25% to $40.1 billion for the quarter ended Dec. 31. Analysts were expecting revenue of $39.2 billion, according to LSEG data.
Earnings per share rose more than 200% to $14 billion, or $5.33 per share, exceeding expectations of $4.97 per share, according to LSEG data.
“This was one of the most impressive quarters – intrinsically and vs. expectations,” said Evercore ISI analyst Mark Mahaney.
Meta forecast first quarter revenue of $34.5 billion to $37 billion, above Wall Street expectations of $33.8 billion. It said it expects full-year 2024 total expenses to be unchanged at $94 billion to $99 billion.
Tuesday saw Wall Street dismayed by the results of a new tab issued by fellow digital advertising heavyweight Alphabet (GOOGL.O), as holiday season advertising sales fell short of projections.
The stock of Meta, which also owns WhatsApp and Instagram, has been gradually rising since a collapse in 2022 that destroyed about three-quarters of the company’s initial value.
Rebounding sales of digital ads and user growth have contributed to its comeback. Additionally, since late 2022, it has let go of over 21,000 workers, leaving it with 67,300 by the end of the year.
More Investment for AI and Metaverse
Improvements to the social media business have made investors more tolerant of Meta’s undiminished spending, as it pours billions of dollars into “metaverse” technologies and building out its artificial intelligence infrastructure.
On Thursday executives doubled down on aggressive investments into both areas.
The company’s metaverse-oriented Reality Labs division handily beat revenue expectations for the fourth quarter, posting record sales of $1.1 billion from “strong sales” of its Quest device over the holiday season, Zuckerberg told analysts after the report. Investors had been expecting $804 million, according to LSEG data.
Meta said it still expected operating losses for Reality Labs to “increase meaningfully” as it invests more in augmented and virtual reality in 2024.
But even before the company delivers the most sophisticated capabilities envisioned for those devices, Zuckerberg said the latest version of its Ray-Ban smart glasses, with a built-in AI assistant, had been an early surprise hit with consumers.
“We thought we would have to build full displays and holograms” before the smart glasses would become mainstream, he said. “And now it’s quite possible that … AI assistants built in will be the killer app.”
Results showed how investments were fueled by its primary business of advertising. Ad impressions, or views, rose 21% year over year, according to Meta, while the average price per ad grew by 2%.
“Meta ended 2023 on an extremely strong note, with revenue soaring above analyst expectations,” said Debra Aho Williamson, an independent tech analyst and former principal analyst at eMarketer.
“The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta.”