In a historic shift, Meta Platforms Inc. has embarked on an unprecedented journey by announcing its first-ever dividend payout of 50 cents per share alongside a monumental $50 billion share buyback plan. This groundbreaking move follows a stellar performance in the fourth quarter of 2023, where Meta reported earnings per share of $5.33, significantly surpassing analysts’ expectations of $4.96. The response from investors was immediate, with the company’s stock surging more than 21% by midday Friday.
The company’s impressive financials extend beyond earnings, with revenues reaching $40.1 billion, outpacing predictions. Meta’s guidance for the upcoming quarter, ranging between $34.5 billion and $37 billion, exceeded analysts’ forecasts of $33.8 billion. The upbeat results reflect a pivotal year for Meta, marked by increased operational discipline, strong execution across product priorities, and improved advertising performance.
Despite concerns about Meta’s Reality Labs unit reporting ongoing losses—$4.64 billion in this quarter compared to an expected $4.26 billion—investors are seemingly unfazed. CEO Mark Zuckerberg’s unwavering belief in the metaverse has fueled continued investments in augmented reality/virtual reality development within the Reality Labs unit.
Notably, Meta’s commitment to maintaining 2024 expenses within the range of $94 billion to $99 billion signals confidence in its current operational structure. This stands in contrast to the extensive job cuts witnessed in the previous “year of efficiency,” where over 20,000 positions were eliminated in just over a year.
The buoyant earnings report comes on the heels of a Senate Judiciary Committee hearing where Zuckerberg, along with executives from other tech companies, faced scrutiny likening social media to Big Tobacco. While Meta did not directly address this issue in its earnings release, it did acknowledge the regulatory challenges ahead.
In a statement, Meta recognized the evolving regulatory landscape, particularly the legal and regulatory headwinds in the EU and the U.S., which could significantly impact business and financial results. The Federal Trade Commission’s attempt to modify Meta’s existing consent order and impose additional restrictions is a looming concern that the company is actively contesting, recognizing the potential adverse impact on its business.
Amidst these challenges, Meta’s strategic decision to introduce dividends and undertake a massive share buyback demonstrates a calculated move to reward shareholders and instill confidence in the company’s future, further solidifying its position in the ever-evolving tech industry.