Surging past market expectations, Meta Platforms Inc. (META) witnessed an impressive stock rally on Friday, catapulting over 20% following the release of stellar earnings, robust guidance, and the announcement of strategic initiatives for shareholder returns.
This extraordinary surge translated into a substantial addition of nearly $200 billion to Meta’s market capitalization, establishing a new stock market record as per Bloomberg data. On Friday, Meta’s shares were trading around $475, marking a remarkable recovery from the stock’s 2022 lows when it plummeted to as low as $90.
Currently boasting a market capitalization exceeding $1.2 trillion, the company reported adjusted earnings per share (EPS) of $5.33 on revenue amounting to $40.11 billion for the fourth quarter. Analysts, relying on Bloomberg consensus data, had anticipated adjusted EPS of $4.94 on revenue of $39.01 billion. In comparison, the company reported revenue of $32.2 billion in the same quarter the previous year.
In addition to the stellar financial results, Meta announced a substantial increase in its stock buyback authorization by $50 billion and the initiation of a quarterly dividend of $0.50 per share. Looking forward, the company anticipates revenue in the current quarter to range between $34.6 billion and $37 billion, surpassing analysts’ predictions set at $33.6 billion.
Meta also reported 2.11 billion Facebook daily active users
Highlighting the robust performance in Q4 2023, Meta’s advertising revenue reached an impressive $38.7 billion, surpassing expectations set at $37.8 billion. The company also reported a substantial daily active user base of 2.11 billion on Facebook, exceeding the Wall Street estimate of 2.07 billion.
While ad impressions saw a significant 21% rise compared to the previous year, the average price per ad experienced a slight dip of 2%.
However, Meta’s Reality Labs division remains a financial challenge, tasked with realizing Mark Zuckerberg’s metaverse vision. Despite incurring a loss of $4.65 billion in the fourth quarter, up from $4.3 billion the previous year, the division exceeded revenue expectations, reaching $1.07 billion compared to the anticipated $812 million.
The launch of Apple’s Vision Pro headset has the potential to fuel consumer interest in AR/VR headsets, potentially impacting Meta’s Quest line positively.
Despite the financial burden of Reality Labs, investor attention has shifted towards increased investments in generative AI. In a January Instagram Reels post, Zuckerberg unveiled the company’s long-term strategy of developing general artificial intelligence and making it open source.
Generative AI, broadly defined as AI capable of thinking and learning like a human across various domains, is becoming a pivotal focus for Meta amid expectations of total expenses reaching $94 billion-$99 billion in 2024. The company acknowledged that payroll costs would rise as it expands its workforce in higher-cost, technical roles, particularly in the field of AI.
Meta also disclosed restructuring charges of $3.45 billion in 2023, including severance and facilities consolidation. The company’s headcount as of December 31, 2023, stood at 67,317, reflecting a 22% reduction compared to the prior year.
Over the past 12 months, the Company’s market performance has been exceptional, with shares surging by 121%, outperforming major tech players such as Apple (AAPL), Google (GOOG, GOOGL), Microsoft (MSFT), and Amazon (AMZN).
In January, Meta once again surpassed the $1 trillion market capitalization threshold, solidifying its position as a dynamic force in the evolving tech landscape.
