Ahead of Facebook, the world’s most popular social network, turning 20 years old, Meta Platforms (META.O) announced a new tab and paid out its first dividend, along with revenue and profit that above forecasts due to strong ad sales during the holiday season.
Following the bell, the company’s stock market valuation increased by almost $140 billion as a result of a sharp increase in shares that saw Meta reach record highs in recent weeks for the first time in over two years.
The after-hours gains alone amounted to more than quintuple the entire value of social media rival Snap Inc (SNAP.N).
Meta, one of the tech sector’s original unicorns, said its dividend would be 50 cents per share. It also announced it had authorized an additional $50 billion in share repurchases.
The social media giant is the first of its generation of internet juggernauts to issue a dividend, a milestone for a tech sector that has been dominated by the same handful of companies for well over a decade.
Founded in a college dorm room in 2004, it has grown into the world’s biggest social media company, connecting more than 3 billion people and revolutionizing how they discover trends, communicate with their neighbors and engage with politics.
The company, which owns Instagram and WhatsApp, has also been accused of ignoring a multitude of harms on its path to growth, including violations of user privacy and incitements to violence.
Just a day before announcing results, CEO Mark Zuckerberg was called to testify before the U.S. Senate about child safety online and compelled to apologize to parents of children who had experienced sexual abuses.
“You’re never as good as they say when you’re up, or as bad as they say when you’re down. Just keep building and doing good work over long periods of time,” he said on Thursday in a post on another Meta-owned app, Threads.
IMPRESSIVE QUARTER
Shares of Meta have steadily been climbing back this past year from a meltdown in 2022 that wiped out more than three-quarters of their one-time value, buoyed by investor excitement about artificial intelligence.
Its recovery has also been aided by a rebound in user growth and digital ad sales, as well as an austerity drive that saw it shed more than 21,000 employees since late 2022.
Revenue for the fourth quarter rose 25% to $40.1 billion, above the $39.2 billion analysts were expecting, according to LSEG data.
Net income 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.
Those results came after fellow digital ads heavyweight Alphabet (GOOGL.O), posted holiday season advertising sales that came in below expectations.
MORE METAVERSE, AI INVESTMENTS
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 in both areas.
The company’s metaversee-oriented Reality Labs unit 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.
While interactive and immersive experiences via those technologies remain the ultimate goal, Zuckerberg said the latest version of its Ray-Ban smart glasses, with a built-in AI assistant, has been an early surprise hit with consumers too.
“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.”
Still, though improving, Reality Labs sales remain a tiny 2.7% slice of the company’s total revenue.
“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.”
