Meta’s Stellar Earnings: Surpassing Estimates with Buybacks and Dividends Boost

Social media giant Meta Platforms (META) reported fourth quarter earnings that beat analysts’ estimates for revenue and profit. The company gave a positive outlook for the current quarter and announced new shareholder return initiatives.

For the fourth quarter, Meta reported adjusted earnings per share (EPS) of $5.33 on revenue of $40.11 billion. According to Bloomberg consensus data, analysts expected adjusted earnings per share of $4.94 on revenue of $39.01 billion. The company reported revenue of $32.2 billion in the same quarter last year.

The company also increased its stock repurchase authority by $50 billion and instituted a quarterly dividend of $0.50 per share.

For the current quarter, Meta expects sales of between $34.6 billion and $37 billion, exceeding analysts’ sales expectations of $33.6 billion.

Shares of Meta soared, gaining as much as 17% in premarket trading on Friday.

Meta’s fourth-quarter advertising revenue was $38.7 billion, beating expectations of $37.8 billion. The company also reported 2.11 billion daily active Facebook users. Wall Street expected 2.07 billion.

The company reported that ad impressions increased 21% year-over-year during the period, while the average price per ad decreased 2%.

However, Metas Reality Labs continues to weigh on the company. The division tasked with turning Zuckerberg’s vision of the metaverse into reality lost another $4.65 billion, compared to the $4.3 billion the company lost on that endeavor in the same period last year had. Still, the division beat revenue expectations, topping $1.07 billion versus the expected $812 million.

The launch of Apple’s competing Vision Pro headset could increase consumer interest in AR/VR headsets and have a domino effect for Meta’s Quest headset range.

But Meta’s Reality Labs efforts have taken a backseat in investors’ minds amid increasing investment in generative AI. In January, Zuckerberg announced in an Instagram Reels post that the company’s long-term strategy was to develop general artificial intelligence and make it open source.

There is no single definition of generative AI, but broadly speaking it is a type of AI that can think and learn like a human. In other words, it is capable of understanding a variety of concepts rather than specializing in a particular area.

 

In 2024, Meta expects spending totaling $94 billion to $99 billion. Among other things, the company notes that labor and salary costs will rise this year as the company hires more staff in higher-cost, technical roles as part of its push into AI capabilities.

Meta also announced that restructuring costs, including severance payments and asset consolidation, totaled $3.45 billion in 2023. The company’s headcount was 67,317 as of December 31, 2023, 22% less than the previous year.

Meta has been on a tear over the past 12 months, with shares rising 121% in that period and outperforming companies like Apple (AAPL), Google (GOOG, GOOGL), Microsoft (MSFT), and Amazon (AMZN).

In January, the company’s market capitalization again exceeded $1 trillion.

 

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