Meta Platforms META-Q issued its first ever dividend days ahead of flagship social network Facebook’s 20th anniversary, while reporting revenue that beat expectations as a result of robust ad and device sales in the holiday shopping period. Shares soared more than 14 per cent after the bell, extending a long recovery in which Meta hit record highs in recent weeks for the first time in over two years.
The company’s stock market valuation surged by about $130 billion, pushing it to five times that of smaller rival Snap Inc .
The company, 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 per cent to $40.1 billion for the quarter ended Dec. 31. Analysts were expecting revenue of $39.2 billion, 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.
On Tuesday, fellow digital ads heavyweight Alphabet posted results that disappointed Wall Street, after holiday season advertising sales came in below expectations.
Shares of Meta, which also owns Instagram and WhatsApp, have been steadily climbing back from a meltdown in 2022 that wiped out more than three-quarters of the company’s one-time value.
Its recovery has been aided by a rebound in user growth and digital ad sales. It also has shed more than 21,000 employees since late 2022.
Improvements to the social media business have made investors more tolerant of Meta’s undiminished spending, with investments in “metaverse” technologies and billions to build out its artificial intelligence infrastructure.
Meta said ad impressions, or views, increased 21 per cent from a year ago and the average price per ad increased 2 per cent.
“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.”
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.