Facebook parent Meta declares first dividend, shares soar

(Reuters) -Meta Platforms issued its first dividend days ahead of flagship social network Facebook’s 20th anniversary, while reporting revenue and profit that beat expectations on robust ad sales in the holiday shopping period.

Shares soared more than 14% after the bell, extending a long recovery that saw Meta hit record highs in recent weeks for the first time in over two years.

The company’s stock market valuation surged by more than $140 billion. The increase alone was more than quintuple the entire value of smaller social media rival Snap Inc.

Meta, one of the tech sector’s original unicorns, said the dividend would be 50 cents per share. It also announced it had authorized an additional $50 billion in share repurchases.

“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta CEO Mark Zuckerberg said in a prepared statement.

Revenue rose 25% to $40.1 billion for the quarter ended Dec. 31. Analysts were expecting revenue of $39.2 billion, according to LSEG data.

Earnings per share rose more than 200% to $14 billion, or $5.33 per share, exceeding expectations of $4.97 per share, according to LSEG data.

“This was one of the most impressive quarters – intrinsically and vs. expectations,” said Evercore ISI analyst Mark Mahaney.

Meta forecast first quarter revenue of $34.5 billion to $37 billion, above Wall Street expectations of $33.8 billion. It said it expects full-year 2024 total expenses to be unchanged at $94 billion to $99 billion.

On Tuesday, fellow digital ads heavyweight Alphabet posted results that disappointed Wall Street, after holiday season advertising sales came in below expectations.

Shares of Meta, which also owns Instagram and WhatsApp, have been steadily climbing back from a meltdown in 2022 that wiped out more than three-quarters of the company’s one-time value.

Its recovery has been aided by a rebound in user growth and digital ad sales. It also has shed more than 21,000 employees since late 2022, ending the year with 67,300 employees.

MORE METAVERSE, AI INVESTMENTS

Improvements to the social media business have made investors more tolerant of Meta’s undiminished spending, as it pours billions of dollars into “metaverse” technologies and building out its artificial intelligence infrastructure.

On Thursday executives doubled down on aggressive investments into both areas.

The company’s metaverse-oriented Reality Labs division handily beat revenue expectations for the fourth quarter, posting record sales of $1.1 billion from “strong sales” of its Quest device over the holiday season, Zuckerberg told analysts after the report. Investors had been expecting $804 million, according to LSEG data.

Meta said it still expected operating losses for Reality Labs to “increase meaningfully” as it invests more in augmented and virtual reality in 2024.

But even before the company delivers the most sophisticated capabilities envisioned for those devices, Zuckerberg said the latest version of its Ray-Ban smart glasses, with a built-in AI assistant, had been an early surprise hit with consumers.

“We thought we would have to build full displays and holograms” before the smart glasses would become mainstream, he said. “And now it’s quite possible that … AI assistants built in will be the killer app.”

Results demonstrated how its core advertising business helped fuel investments.

Meta said ad impressions, or views, increased 21% from a year ago and the average price per ad increased 2%.

“Meta ended 2023 on an extremely strong note, with revenue soaring above analyst expectations,” said Debra Aho Williamson, an independent tech analyst and former principal analyst at eMarketer.

“The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta.”

(Reporting by Katie Paul in New York and Yuvraj Malik in Bengaluru; Additional reporting by Sheila Dang in Austin and Noel Randewich in San Francisco; Editing by Arun Koyyur, David Gregorio and Kenneth Li)