US Market Updates : Friday saw a sharp increase in the price of Facebook parent company Meta’s shares after the business announced a tripling increase in fourth-quarter profits and declared its first-ever dividend.
The Meta stock increased by around 17% during morning trading.
Meta’s revenue increased by 25% in the fourth quarter from $32.2 billion in the same period last year. This is the fastest growth rate recorded since mid-2021, and it coincides with an upturn in the internet ad sector. In comparison to the previous year, Meta’s net income more than tripled to $14 billion from $4.65 billion.
First-ever dividend
Meta announced that it will distribute its first-ever cash dividend to stockholders on March 26 at a rate of 50 cents per share. This comes as cash and equivalents increased from $40.7 billion to $65.4 billion at the end of 2023.
In addition, Meta declared a $50 billion share repurchase.
Investors applauded the dividend declaration.
According to Quilter Cheviot’s Ben Barringer, a technology analyst, this is a “symbolic moment and indicates what a turnaround story Meta has been on since its struggles in 2022.”
Barringer stated in an email that “Mark Zuckerberg is demonstrating that he wants to bring shareholders along with him and is highlighting that Meta is now a mature, grown-up business.”
Investor attention has also been drawn to Meta’s actions in the field of artificial intelligence. With its LLaMA large language model, which competes with OpenAI’s GPT-4, which is supported by Microsoft, the company has a foothold in the AI space.
Although not yet on display, Barringer referred to Meta as a “closet AI winner” and stated that the company’s AI “will be better servicing advertisers and making the ads themselves more relevant for users.”
For technological companies, which are typically valued by investors for their capacity to generate fast growth rates that necessitate capital inputs back into the business, cash dividends are an uncommon development.
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