Meta stock reached a record high closing price on Friday following what one analyst called a “monumental” earnings report, in which Facebook’s parent company announced its first dividend.
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meta platform (META) said late Thursday it earned $5.33 a share on sales of $40.1 billion. For the quarter ending December. According to FactSet, analysts had forecast the company would earn $4.82 per share on sales of $39.1 billion.
Sales during the quarter increased 25% year over year, while earnings increased 203%.
In addition, Meta said it is initiating a dividend of 50 cents per share of common stock, payable on March 26 to shareholders of record as of Feb. 22.
For the current quarter, Meta estimated sales between $34.5 billion and $37 billion. According to FactSet, heading into the report, analysts were expecting Meta sales of $33.9 billion for the March quarter.
In the stock market today, Meta stock closed at Rs 474, up 20%. This easily surpassed Meta’s previous high of 401.02 on Monday.
“We had a great quarter as our community and business continue to grow,” Meta Chief Executive Mark Zuckerberg said in a news release. “We have made great progress on our vision of advancing AI and the metaverse.”
Meta earnings rise after year-long performance
For the full year, Meta earned $14.87 per share, up 73% from 2022. In 2022, Meta’s previously huge earnings declined by 37% year over year.
In the fourth quarter, spending declined 8% year over year to $23 billion. Operating margin to expand from 20% to 41% in Q4 2022.
Meta cut significant costs last year, including layoffs, in what Zuckerberg hailed as “a year of efficiency.”
“Being a leaner company is helping us do things better and faster, and we will continue to advance these values as a permanent part of our operations,” Zuckerberg said on the company’s call with analysts Thursday. “
Meta’s big AI push
However, Zuckerberg made clear the key areas where Meta will spend big. First and foremost: artificial intelligence.
“Going forward, a key goal will be to build the most popular and most advanced AI products and services,” Zuckerberg told analysts. “And if we succeed, everyone who uses our services will have a world-class AI assistant to help them get the job done.”
Meta launched a series of AI-powered chatbots late last year.
Facebook founder reiterated Thursday his plan to use 350,000 NVIDIA (NVDA) H100 AI-specific computing chips, and the overall calculation power is equivalent to 600,000 H100 chips. Zuckerberg first provided these numbers in an Instagram post last month.
Additionally, Meta raised the high end of its capital spending guidance for 2024 to between $30 billion and $37 billion.
“Generally our expectation is that we will need to invest more to support our AI work in the coming years, and we see some impact of that in 2024,” Chief Financial Officer Susan Lee told analysts. “
Analysts raise Meta stock targets
Wall Street analysts reacted to Meta’s report by significantly increasing their price targets. Stifel analyst Mark Kelly, who rates Meta a buy, raised his 12-month price target to $527 from $405, a 33% upside to Meta’s closing price on Thursday.
“The company is firing on all cylinders and pushing the notion that it will be a more efficient and smaller organization going forward, despite the heavy AI investment cycle,” Kelly wrote. He titled the customer note “A monumental quarter”.
Meanwhile, BofA Securities analyst Justin Post raised his price target to $510 from $425.
“We believe Reels, messaging, and AI-driven advertising improvements (content creation, measurement, etc.) are still nascent, and may accelerate further in 2024,” the post wrote. “Furthermore, with large capital expenditures, internal AI supercomputers, in-house (large language models) and custom AI chips, we think Meta’s AI assets are underappreciated in the stock price.”
Meta Q4 by the numbers
Facebook’s monthly active users increased 3% year over year to 3.07 billion, Meta said.
As is typical, almost all of Meta’s revenue came from digital advertising sales. The company reported advertising sales of $38.7 billion in the quarter, up 24% from the same period last year.
However, the metaverse-focused Reality Labs division surpassed $1 billion in quarterly revenue for the first time. Meta started sales of its latest virtual-reality headset last fall. Still, the division recorded a loss of $4.6 billion, driven largely by losses from the company’s metaverse bets.
Meta’s family of apps, on the other hand, generated revenue of $21 billion in the quarter, compared to $10.7 billion in Q4 2022. The family of apps includes Facebook, Instagram, WhatsApp, Reels, and Threads.
Meta ended 2023 with 67,317 employees, down 22% from the beginning of the year, the company said.
Meta Stock: Up to 30, this year
With Friday’s huge surge, Meta stock is now up more than 30% this year. This has helped drive growth of 194% last year.
In January, Meta again joined an exclusive club of tech giants to reach a market capitalization of more than $1 trillion.
Meanwhile, Meta Platform is on the IBD 50 list of top growth stocks. It is also on the leader list of the IBD Leaderboard premium stock-idea service. IBD Stock Checkup shows Meta with a Relative Strength Rating of 96 as of Thursday, indicating that it has outperformed 96% of all stocks over the past 12 months.
META also has the highest possible 99 IBD Composite Rating, reflecting the strength of several technical and fundamental metrics associated with strong stock performance.
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