Meta shares hit all-time high: Meta boosts stock market value by $196 billion as its shares reach their highest point in a single day.
Meta shares hit all-time high: Meta experiences a remarkable surge, gaining a record-breaking $196 billion in stock market value as its shares reach an all-time high in a single day.
On Friday, Meta Platforms saw an impressive $196 billion increase in stock market value, setting a historic record for the largest one-day gain by any company on Wall Street. This remarkable achievement followed Meta's announcement of its first dividend and strong financial results.
Meta's stock experienced a significant surge of 20.3% during the session, marking its largest one-day percentage increase in a year and the third highest since its debut on Wall Street in 2012. As a result, Meta's current stock market value has surpassed $1.22 trillion.
Just before Facebook's 20th anniversary, Meta announced on Thursday that it has approved an additional $50 billion for share repurchases and revealed a quarterly dividend of 50 cents per share.
Although dividends are typically linked with mature and slow-growth companies, Meta has become the fourth among Wall Street's most valuable technology-related giants to offer dividends, joining the ranks of Apple, Microsoft, and Nvidia.
According to Dan Coatsworth, an investment analyst at AJ Bell, the decision to pay a dividend indicates Meta's intention to revamp its reputation and be perceived more seriously. However, he also noted that the actual amount being paid is seen as more of a symbolic gesture than a substantial financial move.
The surge in Meta's market capitalization on Friday surpassed the earlier record held by Amazon. Amazon had experienced a market value increase of $190 billion on February 4, 2022, following an impressive quarterly report. Notably, just one day before this remarkable gain, Meta incurred a significant loss of over $200 billion in value, marking the largest single-day loss in the history of the U.S. stock market. This downturn followed a bleak forecast issued by Meta.
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Meta's dividend plan translates to a substantial payout for CEO Mark Zuckerberg, who possesses approximately 350 million Meta Class A and Class B shares. This could potentially result in a quarterly payout of around $175 million for the co-founder of Facebook.
Last year, optimism regarding the potential of artificial intelligence played a significant role in a 24% rally in the S&P 500. Notably, companies like Meta, Nvidia, Microsoft, and Broadcom reached record highs. Following Friday's gain, Meta has now experienced a 35% increase in value in the year 2024.
During its fourth-quarter results, the largest social media company in the world highlighted robust ad sales and a resurgence in user growth, leading to a remarkable 25% surge in revenue. Furthermore, the company's projection for the current quarter's revenue surpassed the estimates put forth by analysts.
A surge in revenue, coupled with an 8% reduction in costs and expenses achieved through the elimination of over 21,000 jobs since late 2022, enabled Meta to triple its net income, reaching $14.02 billion.
Jasmine Enberg, Principal Analyst at Insider Intelligence, noted that the focus on the "Year of Efficiency" has yielded positive results, with a decrease in both headcount and costs. Additionally, Meta has surpassed expectations for full-year 2023 ad revenue.
Even though Meta's dividend is relatively modest compared to many companies, it has the potential to enhance the appeal of its stock to a broader range of investors. This includes those interested in exchange-traded funds (ETFs) that specifically focus on stocks known for paying dividends.
After Friday's stock rally, Meta's dividend yield stands at approximately 0.4%. In comparison, Apple's dividend yield is around 0.5%, Microsoft's is 0.7%, and Nvidia's is below 0.1%, according to data from LSEG.
Brian Jacobsen, Chief Economist at Annex Wealth Management, commented, "This can begin to attract investors who genuinely seek dividends and a more stable income."
Data from Morningstar Direct reveals that Exchange Traded Funds (ETFs) concentrating on U.S. dividend-paying companies have amassed assets exceeding $400 billion. This represents slightly over 5% of the entire domestic ETF universe.
Over the past decade, Meta has invested billions of dollars to enhance its computing capacity, specifically for generative AI products. These products are being integrated into platforms like Facebook, Instagram, and WhatsApp. Additionally, Meta has directed resources towards hardware devices, including its Ray-Ban smart glasses.
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