Meta Platforms added $196 billion to its stock market value on Friday, the most by any company in Wall Street history after its Facebook parent announced its first dividend and posted strong results.
Meta’s stock rose 20.3% for the session, its largest one-day percentage gain in a year and the third-largest on record since its 2012 Wall Street debut. Its stock market value is now over $1.22 trillion .
Meta authorized an additional $50 billion in share buybacks late Thursday, days before Facebook’s 20th anniversary, and said its quarterly dividend will be 50 cents per share.
While dividends are associated with mature, slow-growth companies, Meta is the fourth paid by Wall Street’s most valuable technology-related heavyweights, including Apple, Microsoft and Nvidia.
“By paying a dividend, the company wants to reboot its reputation and take it more seriously,” said Dan Coatsworth, an investment analyst at AG Bell. “But ultimately the payment is just a token gesture.”
Friday’s increase in Meta’s market capitalization surpassed the previous record held by Amazon, which grew to $190 billion in market capitalization on Feb. 4, 2022. A day earlier, Meta lost more than $200 billion in value, the biggest loss in US stock market history, after it issued a bearish forecast.
Meta’s dividend plan means a big payout for CEO Mark Zuckerberg, who owns about 350 million Meta’s Class A and Class B shares. The Facebook co-founder earns about $175 million each quarter.
Optimism about the potential of artificial intelligence contributed to a 24% rally in the S&P 500 last year, with Meta, Nvidia, Microsoft and Broadcom all hitting recent record highs. With Friday’s gains, Meta is now up 35% in 2024
The world’s largest social media company rebounded on strong ad sales and user growth during its fourth quarter results that saw its revenue rise 25%. Its forecast for the current quarter’s revenue also beat analysts’ estimates
The increase in revenue, along with an 8% reduction in costs and expenses, allowed Meta to increase its net income to $14.02 billion by 2022, after eliminating more than 21,000 jobs.
“Meta Excelled our expectations for Entire year 2023 ad revenue with headcount and expense reductions,” said Jasmine Enberg, principal analyst at Insider Intelligence.
While Meta’s dividend is smaller than that of many companies, that makes its stock more attractive to investors, including exchange-traded funds focused on dividend-paying stocks.
Meta’s dividend yield is about 0.4% after Friday’s stock rally. By comparison, Apple’s dividend yield is around 0.5%, while Microsoft’s is 0.7% and Nvidia’s is just under 0.1%, according to LSEG.
“That could start to attract investors who are really looking for Distributions and more stable income,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Exchange-traded funds (ETFs) that are focused on U.S. dividend payers have more than $400 billion in assets, just 5% of the entire domestic ETF universe, according to Morningstar Director data.
Meta has spent billions over the past decade to boost its computing power for generative AI products that power Facebook, Instagram and WhatsApp, as well as hardware devices like its Ray-Ban smart glasses.
