Meta hits all time highs; Blows out earnings, initiates dividend and ups buyback by $50 billion
AInvestThursday, Feb 1, 2024 5:04 pm ET
2min read
META --
META --

Meta Platform (META), the parent company of Facebook, Instagram, and WhatsApp, revealed significant updates on its earnings, strategies, and outlook. 

Meta reported an EPS of $5.33, surpassing the estimated $4.96, alongside $40.1 billion in revenue, exceeding the estimated $39.177 billion. The company also recorded a Daily Active Users (DAUs) count of 2.11 billion, higher than the estimated 2.07 billion.

Meta's Q4 report revealed a 6% year-over -year increase in Facebook DAUs, with ad impressions growing 21%, falling short of 24% Street expectations and average price per ad growing 2% which outpaced an expected decline of -4%.

In a significant move, Meta initiated a quarterly dividend of $0.50 per share. and announced a $50 billion increase to its share repurchase program.

META projected Q1 revenues in the range of $34.5 billion to $37 billion, surpassing the estimated $33.64 billion.

Meta reiterated expectations of total expenses in the range of $94-$99 billion for the full year 2024, unchanged from the prior outlook. CapEx is anticipated to be in the range of $30-$37 billion, a $2 billion increase at the high primarily end of the previous range. The increased capital expenditures will be driven by investments in servers and data centers, as the company ramps up construction on its new data center architecture sites. Meta announced its intention to begin a new hiring cycle, focusing on higher-cost technical roles, which will likely lead to increased payroll costs in 2024. It anticipates its infrastructure-related costs, payroll expenses, and operating losses for Reality Labs to increase significantly in 2024.

META plans to focus its growth investments on servers, including AI and non-AI hardware, as well as data centers. The company emphasized the importance of these investments to meet evolving AI capacity demands and support future research and product development. 

If investors are looking for a red flag it would be the company"s statement that it is currently facing potential restrictions from the Federal Trade Commission (FTC) regarding its operations. 

Shares of META are up 13% following the news. The stock hit an all-time high of $452 ahead of its conference call. The results are fantastic. A beat on nearly every metric. If we were splitting hairs we would note the higher expense costs, FTC comment, and miss on ad impressions. However, the higher expenses are money spent on AI which the market will love. The FTC comment is not surprising, but investors would need more detail before getting concerned. The ad impression miss is not surprising as this was forewarned by Alphabet on Tuesday. All of this is easily washed away by the overall results and the massive capital return program it announced. 

In summary, META has reported robust Q4 earnings, surpassing expectations for both EPS and revenue. The company's user base continues to grow steadily, and advertising performance remains strong. META's positive outlook for Q1 2024, along with its dividend initiation and increased share repurchase program, demonstrates confidence in its future prospects. strategic investments in infrastructure, talent acquisition,and AI research and development highlight its commitment to long-term growth.

$META(META)

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