Meta stock Reports Record Profits

Meta stock Reports Record Profits, Triggering Stock Surge and Return to Market Dominance. Almost 4 Billion people used either Facebook, Instagram, or WhatsApp at least once a month during Q4.

That means almost 50% of the world’s population uses a $META product at least once a month. Facebook $META is up more than 10% in after hours following its earnings.

Meta stock Reports Record Profits

In a stunning reversal from its challenging 2022, Meta, the parent company of Facebook, announced its most profitable quarter and year ever in its fourth-quarter earnings report.

The social media giant’s $5.33 earnings per share for the quarter and $14.87 full-year profit per share exceeded analyst estimates, reflecting a remarkable turnaround and fueling a surge in its stock price.

Financial Highlights:

  • Earnings Per Share Records: Meta’s $5.33 earnings per share in the fourth quarter and $14.87 for the full year set new records for the company.
  • Strong Top-Line Growth: Full-year revenue reached a record $40.1 billion, marking a 25% growth, and fourth-quarter revenue hit a new high at $134.9 billion, surpassing forecasts.

Market Response:

  • Stock Surge: Meta’s stock soared more than 10% in after-hours trading following the earnings report. The company’s after-hours share price of about $440 implies a record market value of approximately $1.1 trillion.
  • Share Buybacks and Dividend: Meta’s announcement of another $50 billion in stock buybacks and its inaugural cash dividend of $0.50 per share contributed to the positive market response.

Financial Recovery:

  • Rapid Turnaround: Meta’s financial recovery is notable, with earnings per share expanding by 203% year-over-year in the three-month period ending last month.
  • Net Income: While 2023 net income of $39.1 billion fell short of the 2021 record, the company’s aggressive stock buybacks played a role in boosting per-share profit metrics.

Challenges from 2022 Persist:

  • Reality Labs Segment Losses: Despite the overall positive financial performance, Meta’s Reality Labs segment, encompassing its metaverse initiatives like the Oculus headset, reported a $4.6 billion loss last quarter. The segment’s operating loss widened by 7% compared to Q4 2022.
  • Augmented and Virtual Reality Challenges: The augmented and virtual reality segment recorded a $16.1 billion loss in 2023, indicating ongoing challenges in this area compared to Meta’s highly profitable social media arm.

Investor Confidence and Analyst Views:

  • Investor Confidence: Meta’s stock has surged more than 300% since November 2022, signaling a strong vote of confidence from investors.
  • Analyst Opinions: Analysts, including those from JPMorgan and Bank of America, maintain buy ratings for Meta shares. The market largely embraces CEO Mark Zuckerberg’s vision for the company, even as the Reality Labs segment faces financial hurdles.

AI and Zuckerberg’s Vision:

  • AI Investments: Meta’s foray into artificial intelligence (AI) is evident with its generative AI large-language model “Llama,” competing with industry leaders. Zuckerberg emphasizes the significance of AI across all aspects of Meta’s operations.
  • Market Leadership: Meta aims to reduce reliance on AI chip market leader Nvidia, showcasing ambitions to lead in AI technology.

Zuckerberg’s Wealth and Leadership:

  • Wealth Ranking: Mark Zuckerberg, Meta’s CEO, holds the fifth position among the world’s richest individuals, with a net worth of around $140 billion, primarily driven by his 13% stake in the company.

Meta’s strong financial performance, coupled with strategic moves such as stock buybacks and dividends, positions the company for continued market dominance. Challenges from its metaverse ventures persist, but investor confidence and the company’s commitment to innovation, particularly in AI, are driving Meta’s resurgence in the tech landscape.

Meta’s Fourth-Quarter Earnings Report

Meta’s Fourth-Quarter Earnings Report Highlights Strong Growth and Historic Dividend Announcement

In a significant financial milestone, Meta, formerly known as Facebook, exceeded market expectations in its fourth-quarter earnings report, triggering a 14% surge in its stock during extended trading. The social media giant revealed impressive figures across various key metrics, showcasing robust performance in both user engagement and financial results.

Financial Highlights:

  • Earnings per Share: Meta reported earnings per share of $5.33, surpassing the $4.96 expected by LSEG (formerly Refinitiv).
  • Revenue: The company generated $40.1 billion in revenue, outperforming the $39.18 billion forecasted by LSEG.
  • User Metrics: Meta’s user engagement remained strong, with 2.11 billion daily active users (DAUs) and 3.07 billion monthly active users (MAUs), beating expectations.
  • Average Revenue per User (ARPU): The ARPU stood at $13.12, exceeding the projected $12.81.

Financial Health and Profitability:

  • Revenue Growth: Meta experienced a remarkable 25% increase in revenue compared to the previous year, reaching $32.2 billion.
  • Expense Management: Despite the robust growth, the company successfully decreased expenses by 8% year-over-year to $23.73 billion.
  • Operating Margin: The operating margin more than doubled to 41%, signaling effective cost-cutting measures and enhanced profitability.
  • Net Income: Meta’s net income tripled to $14 billion, translating to $5.33 per share, a substantial increase from $4.65 billion, or $1.76 per share, in the previous year.

Strategic Moves:

  • Dividend Announcement: In a historic move, Meta declared its first-ever dividend payment of 50 cents per share, scheduled for March 26, 2024.
  • Share Buyback: The company also unveiled a $50 billion share buyback, indicating confidence in its financial position and commitment to shareholder value.

Market Performance:

  • Stock Surge: Following the after-hours announcement, Meta’s stock continued its upward trajectory, building on a successful 2023 where it almost tripled. The company’s market capitalization now stands at almost $1.2 trillion.

Future Outlook:

  • Sales Projection: Meta anticipates first-quarter sales to range between $34.5 billion to $37 billion, surpassing analysts’ expectations of $33.8 billion.
  • Expenses Forecast: The company estimates expenses for 2024 to be in the range of $94 billion to $99 billion.
  • Headcount: Meta reported a 22% year-over-year decrease in headcount to 67,317 as of December 31, 2023, following organizational changes and layoffs.

Business Focus and Impact:

  • Revenue Growth Drivers: The biggest contributors to Meta’s revenue growth came from companies in areas such as e-commerce, entertainment, and gaming.
  • Chinese Advertisers: Notably, revenue from China-based advertisers accounted for 10% of Meta’s sales for the year, contributing to 5 percentage points of growth.

Leadership Comments:

  • Mark Zuckerberg’s Vision: Meta CEO Mark Zuckerberg highlighted the company’s progress in advancing artificial intelligence (AI) and the metaverse, emphasizing a positive quarter for both the community and business.
  • Future Investments: Zuckerberg expressed Meta’s commitment to continued investment in AI and computing infrastructure while maintaining a lean headcount.

Regulatory Challenges:

  • Congressional Hearing: The earnings report follows a tough questioning session faced by Zuckerberg and other tech executives in a congressional hearing, where they addressed concerns about child exploitation and mental health issues related to their platforms.

In summary, Meta’s fourth-quarter performance reflects robust financial health, user engagement, and strategic moves such as the historic dividend announcement and substantial share buyback. The company’s focus on AI, the metaverse, and responsible growth sets the stage for continued innovation in the evolving landscape of social media and technology.

$META | Meta Q4 ’23 Full Earnings Highlights:

EPS: $5.33 (Est. $4.91)

Revenue: $40.11B (Est. $39.01B)

Ad Revenue: $38.71B (Est. $37.81B)

Daily Active Users: 2.11B (Est. 2.07B)

Initiates Quarterly Dividend: $0.50/Share

Increases Buyback: $50B

Monthly Active Users: 3.07B (Est. 3.06B)

Sees Q1 Revenue: $34.5B – $37B (Est. $33.64B)

Other Key Updates:

Restructuring Charges: $4.61B for Full Year 2023Anticipates Full-Year 2024 CapEx: $30-37B

Headcount Reduction: 22% YoY to 67,317 employees

Total Expenses Forecast for 2024: $94-99B CEO Commentary:

“We’ve made significant progress on our vision for advancing AI and the Metaverse, with a lot of momentum heading into 2024.” CFO Insight:

“Our financial performance in Q4 demonstrates the strength and resilience of our business. We are well-positioned for sustainable growth and shareholder returns.” Strategic Moves:

Contesting FTC’s attempt to modify the existing consent order, which could impact business operations.

Increased focus on long-term AI research and product development, requiring growing infrastructure investments beyond 2024.

Meta’s board declared a cash dividend of $0.50 per share, reflecting confidence in the company’s cash flow and financial health.

Announced a $50 billion increase in share repurchase authorization, underscoring commitment to returning value to shareholders.