Meta Platforms Breaks Records with Phenomenal Growth on Wall Street
Friday witnessed an unprecedented surge in Meta Platforms Inc's stock market value by an astonishing $196 billion, setting a new record for the largest single-day gain by a company in Wall Street history. This historic leap came in the wake of the Facebook parent company announcing its robust results alongside its first-ever declared dividend. On the day, Meta's share prices surged by 20.3%, representing its most significant one-day percentage surge in the past year and standing as the third-largest since its debut on Wall Street in 2012. Now Meta boasts a market capitalization exceeding $1.22 trillion.
A New Era of Dividends for Meta Platforms
In the days leading up to Facebook's 20th anniversary, Meta Platforms made an announcement late on Thursday to authorize an additional $50 billion in share buybacks, as well as declaring quarterly dividends of 50 cents per share. Although dividends are typically attributed to slow-growth, mature companies, Meta joins fellow tech giants Apple, Microsoft, and Nvidia in offering dividends. Dan Coatsworth, investment analyst at AJ Bell, commented that "Despite the amount being a symbolic gesture, paying a dividend suggests the company is aiming to enhance its reputation and demand more respect."
Meta Platforms Sets New Milestone in Market Capitalization
The increase in Meta's market capitalization managed to surpass the previous record held by Amazon, which witnessed a jump in its market value by $190 billion on February 4, 2022, following exceptional quarterly results. A day prior, Meta set another record by suffering the most significant loss in U.S. stock market history, losing over $200 billion in market value due to pessimistic forecasts.
Zuckerberg to Benefit Substantially from Dividend Plan
CEO Mark Zuckerberg, who holds about 350 million Meta Class A and Class B shares, stands to gain from Meta's dividend plan. The Facebook co-founder is slated to pocket roughly $175 million each quarter.
Meta's Impressive Performance and Future Outlook
Meta's current success can be partly attributed to the optimism surrounding the potential of artificial intelligence, contributing to a 24% rally in the S&P 500 last year. After recording stellar performance in recent times, Broadcom, Microsoft, Nvidia, and Meta themselves have seen their market capitalizations reach all-time highs. Coupled with strong ad sales and recovering user growth, Meta’s fourth-quarter revenue leaped 25%, exceeding analysts' estimates. Trimming more than 21,000 jobs since 2022 and seeing an 8% decrease in costs, its net income tripled to reach $14.02 billion.
Meta Dividend: A Small Step in the Big Picture
Although modest compared to other well-established companies, Meta's offerings can entice a varied set of investors, including ETFs targeting dividend-paying stocks. Meta's dividend yield stands at 0.4% after the recent stock rally, compared to Apple's 0.5%, Microsoft's 0.7%, and Nvidia’s under 0.1%. "This move could potentially draw in investors who prioritize dividends and steady income," according to Brian Jacobsen, Chief Economist at Annex Wealth Management.
Significant Investments in AI by Meta
Over the past ten years, Meta has poured billions into enhancing its computational capabilities for AI products for WhatsApp, Instagram, and Facebook, and hardware devices like its Ray-Ban smart glasses.