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HomeTechMeta adds over $200 billion in value as job cuts and dividend...

Meta adds over $200 billion in value as job cuts and dividend pay off

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By Samrhitha A, Aishwarya Venugopal and Chuck Mikolajczak
(Reuters) -Meta added over $200 billion in stock market value and its share price was on track for the biggest one-day percentage jump in a year on Friday after the Facebook parent’s first dividend declaration and robust results.

Days ahead of Facebook’s 20th anniversary, Meta authorized an additional $50 billion in share repurchases and said its quarterly dividend would be 50 cents per share.

Meta’s stock shot up as much as 21.7%.

The social media giant is the first of its generation of internet juggernauts to issue a dividend, and the fourth of the so-called “Magnificent Seven” stocks, with its yield of 0.5% matching that of Apple, according to LSEG data.

“The returning of cash to shareholders is a bold and well-regarded move. The amount of free cash pumping through the business means it is more than able to afford it, and it helps pay investors for their patience,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said.

The dividend plan will means a hefty payout for CEO Mark Zuckerberg, who owns about 350 million Meta Class A and Class B shares. The Facebook co-founder could get about $175 million every quarter.

“Meta’s strategy of announcing buybacks and dividends right before the Fed begins to cut rates is a brilliant move. As the battle for innovation grows … in the Big Tech space, investors will see any extra capital as dry powder for future earnings growth,” said Thomas Monteiro, analyst at Investing.com.

The company flagged strong ad sales and a rebound in user growth during its fourth-quarter results on Thursday that saw its revenue surge 25%. Its forecast for current-quarter revenue was also above analysts’ estimates.

That jump in quarterly revenue, combined with an 8% drop in costs and expenses after eliminating over 21,000 jobs since late 2022, allowed Meta to triple its net income to $14.02 billion.

“The ‘Year of Efficiency’ has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue,” Jasmine Enberg, principal analyst at Insider Intelligence, said.

The world’s biggest social media company has been spending billions of dollars over the past decade to boost its computing capacity for generative AI products it is adding to Facebook, Instagram and WhatsApp, and to hardware devices such as its Ray-Ban smart glasses.

Meta’s shares recently traded at 21 times expected earnings, compared with a forward PE of 84 for smaller social media rival Snap, 20 for Alphabet, 41 for Amazon.com, 32 for Microsoft and 27.36 for Apple.

(Reporting by Aishwarya Venugopal and Samrhitha Arunasalam in Bengaluru; Additional reporting by Medha Singh and Yuvraj Malik, and by Noel Randewich in Oakland, Calif.; Editing by Shounak Dasgupta and David Gregorio)

Disclaimer: This report is auto generated from the Reuters news service. ThePrint holds no responsibilty for its content.

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