Meta Platform has done something that has never been done before
stock meta platform (NASDAQ:META) took off Friday morning after the company that owns Facebook and Instagram more than tripled its net income in the fourth quarter and did something it’s never done before.
that what It was paying quarterly dividends to investors. The company’s initial dividend payment, which went public in 2012, is 50 cents per share and will be paid on March 26. Meta management said it intends to pay dividends quarterly, so it’s not a one-time reward for a good quarter. .
The market reacted favorably to Meta’s fourth quarter report. Shares of Meta soared Friday morning, up about 20% to more than $473 per share.
Meta offers dividends for the first time
In an earnings call held after the company’s fourth-quarter results were released Thursday afternoon, Meta Chief Financial Officer Susan Li explained the rationale for initiating the dividend.
“(Returning capital to shareholders remains an important priority for us and we believe the introduction of a dividend really just serves as a good complement to our existing share repurchase program,” she said. It doesn’t change how much we’ll do, otherwise it doesn’t change how we determine the total amount of capital we return, and we expect share repurchases to continue to be our primary way of returning capital to shareholders, but we also expect dividends to be Introducing it just gives us a more balanced outcome – it adds flexibility to our capital return program and how we return capital in the future.”
In addition to the dividend, Meta also announced plans to increase its share buyback plan by $50 billion. Last year, the company repurchased $20 billion worth of stock, and as of Dec. 31, it had about $31 billion worth of shares it had authorized to repurchase. So the $50 billion authorization will be added on top of that.
This move makes sense not only for Meta and its shareholders, but also in a broader sense. That’s because the company is the first internet/social media technology giant to offer a dividend. The same goes for Amazon (NASDAQ:AMZN), Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), and Netflix (NASDAQ:NFLX).
Fast-growing companies in the technology sector and elsewhere typically prefer to forego dividends and invest excess capital to accelerate business growth.
Therefore, this is a major milestone for Meta, which means that dividend payments are not the only criterion of maturity, nor is it a factor of maturity, but a mature and more stable company in many respects. This could also make Meta more attractive to institutional investors who prefer stable dividend payers.
explosive branch
The dividend payout may be the headline news for Meta, but it’s only part of the story. The company finished the year with a strong fourth quarter. Meta’s revenue rose 25% year-over-year in the quarter to $40.1 billion, while net income rose 200% to $14 billion, or $5.33 per share.
The company’s profits were boosted by an 8% decline in expenses in the quarter due to a restructuring initiative launched in 2022 to make it more efficient and strategic. Cost savings were achieved through staff reductions and facility consolidation, resulting in Meta’s operating margin doubling from the previous year to 41%.
For the full year, Meta’s revenue rose 16% to $134.9 billion, while net income rose 69% to $39.1 billion, or $14.87 per share. Operating profit margin increased by 10 percentage points to 35%.
“2023 will be focused on making Meta a stronger technology company, improving our business and providing the stability to deliver our ambitious long-term vision for AI and the Metaverse,” CEO Mark Zuckerberg said in the earnings call. “It was the ‘Year of Efficiency,’” he said.
The company more than doubled its free cash flow in the quarter to $11 billion, helping it grow to $43 billion, a 134% increase from the previous year.
In 2024, Meta expects costs to range from $94 billion to $99 billion, up from $88 billion in 2023. The company expects its infrastructure costs to increase due to increased capital investments in recent years and its payroll costs to increase as it hires more employees. Supports priority areas and higher costs of Reality Labs’ business for product development efforts in augmented reality/virtual reality.
The outlook for the stock remains optimistic, as Meta received a significant price target increase from analysts after posting earnings results. However, we won’t have the same type of year as 2023 because the company’s valuation has risen and higher costs and higher capital expenditures are expected in 2024.
