Metaplatform added The stock market value hit US$196 billion (R3.7 trillion) on Friday, the biggest single-day gain in Wall Street history after Facebook's parent company declared its first dividend and reported strong results.
Meta's stock rose 20.3% during the session, its biggest single-day gain in a year and the third-biggest since its Wall Street debut in 2012. Its stock market value currently stands at over $1.22 trillion.
Late Thursday, just days away from Facebook's 20th anniversary, Meta announced it would approve an additional $50 billion in stock buybacks and pay a quarterly dividend of $0.50 per share.
Dividends are associated with mature, low-growth companies, but Meta's is the fourth most valuable technology powerhouse on Wall Street to offer, along with Apple, Microsoft and Nvidia.
“Paying a dividend suggests that the company wants to reboot its reputation and be taken more seriously. But the amount ultimately paid is just a token gesture. No,” said Dan Coatsworth, investment analyst at AJ Bell.
Meta's market cap increase on Friday surpassed Amazon's previous record, when Meta's market cap soared $190 billion on February 4, 2022, following the release of an explosive quarterly report. . A day earlier, Meta Corp. had issued a dire outlook, causing it to lose more than $200 billion in value, the largest loss in U.S. stock market history.
Meta's dividend plan means a hefty payout to CEO Mark Zuckerberg, who owns about 350 million shares of Meta's Class A and Class B shares. Facebook's co-founder could earn about $175 million per quarter.
AI rally
Optimism about the potential of artificial intelligence helped drive the S&P 500 up 24% last year, with Meta, Nvidia, Microsoft and Broadcom recently hitting record highs. Friday's rally will push the meta up 35% in 2024.
The world's largest social media company reported strong advertising sales and a rebound in user growth, with revenue up 25% in fourth-quarter results. The company's sales forecast for the current quarter also exceeded analysts' expectations.
Meta's net income tripled to $14.02 billion, thanks to a jump in revenue and an 8% decline in costs and expenses as the company cut more than 21,000 jobs starting in late 2022.
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“Meta exceeded full-year 2023 ad revenue expectations as both headcount and costs declined and a 'year of efficiency' paid off,” said Jasmine Enberg, Principal Analyst at Insider Intelligence. .
Although Meta's dividend is small compared to many companies, Meta's stock price could be more attractive to a broader range of investors, including exchange-traded funds (ETFs) that focus on stocks that pay dividends. .
Meta's dividend yield is around 0.4% after Friday's share price rise. By comparison, Apple's dividend yield is about 0.5%, compared to Microsoft's 0.7% and Nvidia's less than 0.1%, according to LSEG.
“This could start to attract investors who really want dividends and stable income,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Exchange-traded funds focused on U.S. dividend payers have more than $400 billion in assets, accounting for just over 5% of all domestic ETFs, according to Morningstar Direct data.
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Meta has spent billions of dollars over the past decade to power the computing power of its generative AI products that it adds to Facebook, Instagram, WhatsApp, and hardware devices like Ray-Ban smart glasses. — Aishwarya Venugopal and Samrita Arunasalam, Medha Singh, Akash Sriram, Yuvraj Malik, Noel Randewich, (c) 2024 Reuters