By Samrhitha A, Aishwarya Venugopal and Chuck Mikolajczak
(Reuters) -Meta Platforms added over $214 billion in stock market value on Friday, with its shares surging to a record high after the Facebook parent declared its first dividend and posted robust results.
Meta’s stock jumped as much as 23% and was last up 21.4%, on track for its third biggest daily percentage increase since its 2012 Wall Street debut. Its stock market value now stands at more than $1.2 trillion.
Days ahead of Facebook’s 20th anniversary, Meta late on Thursday authorized an additional $50 billion in share repurchases and said its quarterly dividend would be 50 cents per share.
While dividends are associated with mature, slow-growth companies, Meta’s is the fourth offered by Wall Street’s most valuable technology-related heavyweights, along with Apple, Microsoft and Nvidia.
“Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously. But ultimately the amount being paid is only a token gesture,” said Dan Coatsworth, an investment analyst at AJ Bell.
The dividend plan 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.
Optimism about the potential for artificial intelligence contributed to a 24% rally in the S&P 500 last year, with Meta, Nvidia, Microsoft and Broadcom recently hitting record highs. With Friday’s gain, Meta is now up 35% in 2024.
The world’s biggest social media company flagged strong ad sales and a rebound in user growth during its fourth-quarter results that saw its revenue surge 25%. Its forecast for current-quarter revenue also exceeded analysts’ estimates.
Surging revenue, combined with an 8% drop in costs and expenses after eliminating more than 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,” said Jasmine Enberg, principal analyst at Insider Intelligence.
While Meta’s dividend is small compared to many companies, it could make its stock more attractive to a broader swathe of investors, including exchange-traded funds focused on stocks that pay dividends.
Meta’s dividend yield is about 0.4% following Friday’s stock rally. By comparison, Apple’s dividend yield is about 0.5%, while Microsoft’s is 0.7% and Nvidia’s is under 0.1%, according to LSEG.
“This can start attracting investors who really do look for dividends and more steady income,” said Brian Jacobsen, Chief Economist at Annex Wealth Management.
Meta 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.
(Reporting by Aishwarya Venugopal and Samrhitha Arunasalam in Bengaluru; Additional reporting by Medha Singh, Akash Sriram and Yuvraj Malik, and by Noel Randewich in Oakland, Calif.; Editing by Alden Bentley, Shounak Dasgupta and David Gregorio, Kirsten Donovan)
