Meta Platforms (META:NASDAQ)

Last update - 2 February 2024 By James Woods

While not a current holding within any portfolios, as one of the “Magnificent 7”, Meta is a widely followed stock. Shares have risen 15.60% in after-hours trading following the latest Q4 earnings report which has impressed investors.

In its recent earnings report, Meta Platforms Inc. announced plans of a $50 billion share buyback and the initiation of its first-ever quarterly dividend of $0.50 per share, marking a significant step by CEO Mark Zuckerberg to reinforce investor confidence in the company’s strategic investments in the metaverse and artificial intelligence.

The company reported a 25% increase in sales for the fourth quarter, with profits tripling and an optimistic revenue forecast for the current quarter that exceeded analyst forecasts. Meta CFO, Susan Li said the strong increase in revenue in the fourth quarter was due to high spending by China-based advertisers and AI-recommended video content, which saw daily watch time across the company’s apps increase 25% over the year.

Meta’s revenue for the quarter ending December 31 reached $40.1 billion, up from $32.2 billion the previous year, outpacing Wall Street’s expectations of $39 billion. Susan Li added that revenue from China-based advertisers represented 10% of Meta’s total revenue. Profits saw an even more dramatic increase, from $4.65 billion a year earlier to $14 billion, with Meta’s founder and CEO, Mark Zuckerberg, adding “We had a good quarter as our community and business continue to grow.”

2023 saw Meta embark on a significant efficiency drive, with Zuckerberg calling 2023 the “year of efficiency.’ This saw the company implement cost-cutting measures as Meta reduced its workforce by 22% to 67,317 employees and restructured data, incurring a $1.1 billion restructuring charge for the quarter.

Even as Meta navigates these challenges, user engagement across its platforms continues to rise, with more than 3.98 billion monthly users, a 6% increase from the previous year. The company’s commitment to AI and the metaverse, alongside strategic cost-cutting measures, position it for sustained growth. Meta anticipates revenue of $35 billion to $37 billion in the first quarter of 2024 and has adjusted its capital expenditure forecast for 2024 to between $30 billion and $37 billion, reflecting its ongoing investments in infrastructure and AI research and development, with Zuckerberg saying, “we’ve made a lot of progress on our vision for advancing A.I. and the metaverse.”

The latest quarterly report reflects both its current challenges and strategic pivots, as Meta continues to evolve, navigating regulatory challenges and innovating in the AI space.

Be the first to know. Get the Morning Market Wrap each morning.