Meta Platforms declared its first dividend days before Facebook, the company's flagship social network, turned 20, while revealing revenue and earnings above forecasts because of strong ad sales during the Christmas shopping season.
Following the bell, shares surged over 14%, increasing the company's stock market valuation by over $140 billion and extending a protracted recovery that saw Meta reach record-high levels in the past few weeks for the first time in over two years.
The valuation of rival social media company Snap Inc. has more than quintupled just from the after-hours increases.
Meta, which was one of the first unicorns in the tech industry, announced a 50-cent dividend per share. It also declared that it had approved the repurchasing of shares for a further $50 billion.
In an industry where a small number of businesses have dominated the IT sector for more than a decade, the social media behemoth is the first of its generation of internet giants to declare a dividend.
Since its founding in a college dorm room in 2004, it has expanded to become the largest social networking platform in the world, connecting over 3 billion users and completely changing the way people interact with politics, discover trends, and communicate with one another.
Along the way to its rapid expansion, the company, which also owns WhatsApp and Instagram, has come under fire for allegedly disregarding a host of negative consequences, including invasions of privacy and incitements to violence.
Impressive quarter
Thanks to investor enthusiasm surrounding artificial intelligence, Meta's shares have been gradually recovering over the past year from a 2022 meltdown that destroyed over three-quarters of their value.
The company's recovery has also been assisted by a surge in customer growth and digital ad sales, along with an austerity campaign that has resulted in the company laying off more than 21,000 staff since late 2022.
LSEG data shows that revenue for the final quarter increased by 25%, reaching $40.1 billion, surpassing the $39.2 billion analysts had projected. Net income increased by almost 200% to $14 billion, or about $5.33 per share, higher than expected at $4.97 per share.
Wall Street had predicted $33.8 billion in revenue for the first quarter; Meta predicted $34.5 billion to $37 billion. According to their projections, overall expenses for the full year 2024 will remain between $94 billion and $99 billion.
These results came after rival digital advertising giant Alphabet's announcement of holiday season advertising sales that fell short of forecasts.
Increasing investments in metaverse and artificial intelligence
Investors are now more tolerant of Meta's continuous spending thanks to improvements in the social media industry, as it invests billions of dollars in "metaverse" technologies and expands its artificial intelligence network.
Executives increased their aggressive investment in both sectors on Thursday.
Zuckerberg said that the company's metaverse-focused Reality Labs unit easily exceeded revenue projections for the fourth quarter, reporting record sales of $1.1 billion with "strong sales" of the Quest device during the holiday season. Investors had been anticipating $804 million.
As it makes more investments in augmented and virtual reality in 2024, Meta said that it still expects Reality Labs' operating losses to "increase meaningfully".
While immersive and interactive experiences through those technologies are still the ultimate aim, Zuckerberg stated that the most recent version of the company's smart glasses, the Ray-Bans, which have an AI assistant integrated into them, have also been an early surprise to customers.
He said that they would need to create complete displays and holograms before smart glasses became widely available. And now, it's highly likely that the integrated AI assistants will be the game-changing app.
Even then, revenues at Reality Labs still only account for 2.7% of the company's overall income, although they are improving.
Meta finished 2023 on a strong note, with revenue skyrocketing beyond analyst estimates.
The company may talk whatever it wants about artificial intelligence and the metaverse, but at its core, it is still a social networking platform, and advertising remains the company's main source of income.