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Meta earnings top estimates as forecast, buyback, and new dividend send shares soaring

Meta Platforms, the social media giant, has outperformed analysts’ expectations in its fourth-quarter earnings report, showcasing robust results in both revenue and earnings per share (EPS). The company, formerly known as Facebook, also provided a positive outlook for the upcoming quarter and introduced new initiatives for shareholder returns.

In Q4, Meta reported an adjusted EPS of $5.33 on revenue of $40.11 billion, surpassing the consensus estimates of $4.94 EPS on $39.01 billion in revenue. This marks a significant increase from the $32.2 billion in revenue reported during the same quarter the previous year.

Meta has announced an extension of its stock buyback program by an additional $50 billion and introduced a quarterly dividend of $0.50 per share.

The company anticipates revenue for the current quarter to be between $34.6 billion and $37 billion, exceeding analysts’ predictions of $33.6 billion.

Shares of Meta experienced a notable surge, rising up to 17% during premarket trading on Friday.

In terms of advertising revenue, Meta reported $38.7 billion for Q4, exceeding expectations of $37.8 billion. The company also reported 2.11 billion daily active users on Facebook, surpassing the Wall Street estimate of 2.07 billion.

Ad impressions increased by 21% compared to the previous year, while the average price per ad declined by 2%.

Despite strong financial performance, Meta’s Reality Labs division, focused on advancing the metaverse, reported a loss of $4.65 billion, up from $4.3 billion in the same period the previous year. Nevertheless, Reality Labs exceeded revenue expectations, reaching $1.07 billion compared to the anticipated $812 million.

Investors have been closely monitoring Meta’s ventures into the metaverse, but recent attention has shifted to the company’s investments in generative AI. CEO Mark Zuckerberg announced the company’s long-term commitment to developing general artificial intelligence (AI) and making it open source.

Looking ahead to 2024, Meta expects expenses to total $94 billion-$99 billion, with a particular emphasis on rising payroll costs due to increased hiring for AI-related roles.

Meta also disclosed restructuring charges of $3.45 billion in 2023, covering severance and facilities consolidation. The company’s headcount as of December 31, 2023, was 67,317, reflecting a 22% decrease compared to the previous year.

Over the past 12 months, Meta’s shares have surged by 121%, outperforming industry peers such as Apple, Google, Microsoft, and Amazon. In January, Meta’s market capitalization once again surpassed the $1 trillion mark.

This robust financial performance underscores Meta’s continued dominance in the social media and technology landscape, with ambitious plans for metaverse development and investments in AI shaping the company’s future trajectory.

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