On Saturday, February 2nd, the stock of Meta surged by about 20%. This happened after the company proposed their earnings of last year and they announced a new shareholder return initiative. Last years earnings turned out to be better than expected which left investors bullish towards the company and caused it to add almost $200 million in market cap.
The numbers of Meta’s huge gains
After big gains for the social media giant, the shares of the company now stand at about $475 per share which his a record high. This is a big contrast, compared to their lows in 2022 where the stock fell to just $90. Meta is now worth about $1.21 trillion.
The tech company did a lot to achieve that. For the fourth quarter, Meta reported adjusted earnings per share (EPS) to be at $5.33 from revenues of $40.11 billion. This was higher that anticipated. The anticipated EPS was at $4.94 on revenue of just $39.01 billion. The company also reported a revenue of $32.2 billion in the last quarter of 2023. Moreover Meta boosted its stock buyback authorization by $50 billion and initiated a quarterly divided of $0.50 per share. For this first quarter in 2024 Meta anticipates a revenue between $34.6 billion and $37 billion which is way higher that the expected revenues which stand at $33.6 billion.
The earnings from the advertising section of the company also outperformed the expectations with $38.7 billion in actual advertising revenue against $37.8 billion that was anticipated. The company could also shine with 2.11 billion users, also beating anticipations from Wall Street of 2.07 billion users. Meta reported that the impressions on ads rose by 21% and meanwhile the average price for an ad fell 2%. And this, even though a lot of people criticized the ads of Meta in the past and many stopped advertising.
The factors of the massive increase in market capitalization
After the greatest destruction of value in the history of the stock market, Meta has now experienced the greatest rise in the history of the stock market.
It was not just the numbers that led to this record high. The company, led by Mark Zuckerberg, did its best to cut costs and increase advertising revenue last year. And they succeeded. They have been able to spread optimism about the company and make investors bullish on Meta.
We will see if the company is able to continue with these gains as they look to advance their AI business. But to do so, they will have to make some sacrifices that are necessary to stay at the forefront of artificial intelligence. According to Meta, the company expects to spend between $94 billion and $99 billion on things like AI. We don’t know what will happen, but that the company will continue to rise that much is very unclear, also said by researchers from Goldman Sachs.
It is worth noting that Meta has outperformed its rivals such as Google, Apple, Microsoft and Amazon over the past year. With an overall growth streak of 121% over the last 12 months. That is a very impressive run. We will see what the company can do in the next 12 months.
Leave a Reply