Earnings Results

Meta’s stock soars toward record on first-ever dividend — but Zuckerberg sees ‘unpredictable and volatile’ years ahead

As the social-media giant prepares to deliver a quarterly dividend of 50 cents a share, its CEO said last year’s belt-tightening will help it navigate an uncertain future

Social-media giant Meta Platforms Inc. reported its fourth-quarter results on Thursday.

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After 2023’s “year of efficiency” that saw it shed more than a fifth of its staff, social-media giant Meta Platforms Inc. on Thursday started off 2024 with a big reward for investors — in the form of its first-ever dividend, as well as quarterly results that beat expectations thanks to a surge in digital-ad sales.

In the process, Meta shares META, +1.19% soared 15.2% to $454.82 after hours on Thursday, toward what would be an all-time record high. The stock rose 1.2% in the day’s regular trading.

The advance came as Meta — the parent of Facebook, Instagram and WhatsApp — prepares to spend billions of additional dollars on tech infrastructure to support greater AI capabilities for users and businesses. The company said it expects to spend between $30 billion and $37 billion this year, a $2 billion increase from the high point of its prior range, as it invests in servers and data centers.

Chief Executive Mark Zuckerberg said during an earnings call Thursday that becoming a leaner company last year helped Meta run better and gave it flexibility to make longer-term investments in AI and the metaverse. New hires, he said, would be slim compared to historical levels — a trend he said could continue beyond this year.

“A big part of why I wanted to improve our profitability is to give ourselves the ability to go through what is a somewhat unpredictable and volatile period over the next five or ten years,” Zuckerberg said.

“There are different risk factors that are geopolitical or regulatory or different things,” he continued. “But also the technology landscape is somewhat unknown, and we want the ability to be able to surge investments on things like building our larger training clusters, or in just making different investments where that’s necessary.”

The tech conglomerate slashed headcount by 22% to 67,317 in 2023, which it called a “year of efficiency.” During the earnings call, Zuckerberg said that Meta would be pushing forward on building out an AI assistant and making digital advertising more sophisticated.

But at a congressional hearing Wednesday with other tech executives about online child safety, Zuckerberg publicly apologized to families who accused the company of doing too little to protect children using Instagram or Facebook. In October, 41 state attorneys general sued Meta, accusing it of using its technology on Facebook and Instagram to addict children to the sites.

Meta also faces a dispute with the Federal Trade Commission over the agency’s decision to reopen an agreement that would stop the company from collecting revenue on data from people under the age of 18.

On Thursday, Meta declared its first-ever cash dividend of 50 cents a share, payable March 26. It also authorized a $50 billion share-buyback program.

Chief Financial Officer Susan Li said that the company expected to maintain an active stock-buyback program — historically, its primary means of investor payouts. But she said the company was “modestly evolving” its approach via a regular dividend.

Meta reported fourth-quarter net income of $14.02 billion, or $5.33 a share, compared with net income of $4.65 billion, or $1.76 a share, in the year-earlier period.

Revenue expanded 25% to $40.11 billion, from $32.2 billion in the year-ago quarter.

Analysts surveyed by FactSet had, on average, expected net income of $4.82 a share on revenue of $39.1 billion.

A bounce-back in advertising following earlier caution on the economy, as well as the continued monetization of Instagram and Reels plus AI-fueled ad targeting and measurement, contributed to the quarter’s performance. Meta’s results arrived two days after a similarly strong quarter from Google parent Alphabet Inc.  GOOGL, +0.76% GOOG, +0.64%.

“We had a good quarter as our community and business continue to grow,” Zuckerberg said in a statement announcing the results. “We’ve made a lot of progress on our vision for advancing AI and the metaverse.”

Meta executives forecast first-quarter revenue of between $34.5 billion and $37 billion, while analysts on average were expecting $33.9 billion, according to FactSet.

Facebook had 2.11 billion daily active users, up 6% from a year ago, while monthly active users improved 3% to 3.07 billion.

Li said Thursday that as of the first quarter, Meta would no longer report Facebook’s daily and monthly active users or family monthly active people. Instead, the company would start reporting year-over-year changes in ad impressions and average prices per ad at a regional level.

Meta didn’t provide any forecast beyond the first quarter. During the call, some on Wall Street wondered about tougher performance comparisons through the coming year.

“Our revenue for the full year is going to be influenced by a number of factors, including macro conditions that are certainly harder to predict the further out you go,” Li said. “And over the course of 2024, as you said, we’ll be lapping periods of increasingly strong demand.”

Shares of Meta have catapulted 109.1% over the past 12 months as of Thursday’s close, while the broader S&P 500 index  SPX has increased 17.4%.