New York, February 02, 2024 - PRISM MarketView - On the back of an impressive earnings report termed as “monumental” by a market analyst, Meta Platforms’ (META) shares saw a massive surge, setting a new record on Friday’s market close. The earnings report was especially notable as it marked the announcement of Meta’s maiden dividend.
Late Thursday, Meta reported robust per-share earnings of $5.33 on revenues hitting $40.1 billion in the quarter ending in December. Compared to the projected $4.82 per share earnings on $39.1 billion sales, the numbers made for impressive reading. The revenue for the quarter grew 25% YoY, while earnings shot up by a staggering 203%.
For the first time, Meta will be rewarding its shareholders with a dividend, offering 50 cents per share of common stock, payable on March 26. The cut-off for eligibility is February 22.
Predictions for the current quarter estimate sales to fall between $34.5 billion and $37 billion. Before the report’s release, the industry forecast was pinned at $33.9 billion, suggesting a positive outlook.
Meta’s shares rocketed 16% higher on Thursday’s morning trade, opening at 459. “The quarter was beneficial as we achieved growth in our community and business,” said Mark Zuckerberg, Meta’s CEO. He added, “A significant stride has been made towards advancing AI and the metaverse.”
2022 was a year of cost-cutting for Meta with the company implementing layoffs and several other measures in its “Year of Efficiency”. The financial results showed an 8% YoY reduction in Q4 expenses, with operating margins more than doubling from 20% to 41%.
Artificial Intelligence (AI) is a key area where Meta will be focussing its resources. Zuckerberg envisions a world where each user has a top-notch AI assistant. In this pursuit, they have already launched AI-powered chatbots and have plans in place for extensive use of Nvidia’s H100 AI-specialised computing chips.
Several Wall Street analysts have hiked their price targets for Meta following the earning report. Reacting to the promising results, Stifel analyst Mark Kelley increased his 12-month price target from 405 to 527, while Justin Post from BofA Securities raised his target from 425 to 510.
Monthly active users on Facebook grew 3% YoY to 3.07 billion, reflecting increasing user engagement. Ad sales, primarily digital, accounted for a significant chunk of the revenue, amounting to $38.7 billion in Q4, a 24% YoY increase.
Despite this, Meta’s metaverse-oriented Reality Labs division posted a loss of $4.6 billion. However, for the first time, they surpassed the $1 billion revenue mark for a quarter. On a brighter note, Meta’s Family of Apps generated an income of $21 billion, more than doubling the $10.7 billion reported in the fourth quarter of 2022.
Ending 2023 with 67,317 employees, down by 22%, Meta has shown that the company’s lean approach is working. The Friday surge has pushed Meta’s stock value up by more than 30% this year, adding to the 194% surge witnessed in the previous year. With a current market capitalization exceeding $1 trillion, Meta has positioned itself amongst the exclusive club of tech giants.
PRISM MarketView does not provide investment advice.
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Phone: 646-863-6341
Website: https://prismmarketview.com
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