Shares in Facebook’s parent company Meta have soared after it was announced that dividends will be paid to investors for the first time.
Stock in the tech giant surged by more than 15% – adding more than £110bn to its valuation. To put this into context, that rise alone is five times higher than the whole value of its rival Snap.
Meta has been on a winning streak in recent weeks, hitting record highs for the first time in over two years, with its financial performance beating expectations in its latest results.
Analysts say the company has clocked one of its most impressive quarters – with revenue rising 25% to $40.1bn (£31.5bn) in the final three months of 2023.
Meanwhile, Meta’s net income jumped by over 200% to $14bn ($11bn) – fuelled by user growth, a recovery in ad sales, and a brutal cost-cutting drive that has seen 21,000 people lose jobs.
The newly announced dividend has been set at 50 cents (39p) a share, while a $50bn (£39bn) share buyback programme is also set to benefit existing investors.
It marks a rapid turnaround for Meta, whose shares suffered a meltdown in 2022 that wiped out over three-quarters of their value at the time.
Sunday will mark Facebook’s 20th anniversary – with the platform transforming from a website founded in a dorm room to a social network with billions of users.
Meta also owns Instagram and WhatsApp.
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The upbeat results came a day after Meta’s CEO, Mark Zuckerberg, appeared at a heated hearing before politicians in Washington.
He faced parents holding pictures of children who died after being affected by online harms, amid allegations tech platforms are failing to protect young people from being exploited.
One senator accused Mr Zuckerberg of having “blood on his hands” – adding: “You have a product that’s killing people.”
The entrepreneur issued an apology to the families present at the hearing, and said: “No one should go through the things that your families have suffered and this is why we invest so much and we are going to continue doing industry-wide efforts to make sure no one has to go through the things your families have had to suffer.”
Doubling down on the metaverse
Meta has been pouring billions of dollars into fledgling metaverse technologies – virtual worlds – despite Mr Zuckerberg warning that this investment won’t be profitable for years to come.
The extravagant spending had caused alarm among shareholders, but investors have become more tolerant following signs of improvement in other parts of the business.
Reality Labs, the division focused on the metaverse, did deliver record sales of $1.1bn (£860m) in the all-important final quarter of 2024 – Christmas shopping season – driven by “strong” demand for its Quest VR headsets.
However, operating losses within Reality Labs are set to “increase meaningfully” this year.
Another bright spot lies in Meta’s Ray-Ban smart glasses, with Mr Zuckerberg claiming they’ve been an early surprise hit with investors.
While the CEO initially thought this product would only go mainstream after “full displays and holograms” were built, he now believes AI assistants could be “the killer app”.
Independent tech analyst, Debra Aho Williamson, said: “The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta.”