Meta Shares Soar 21% on Stellar Q4 Results, Dividend Payouts

The parent of Facebook and Instagram posted strong advertising results, said it is rapidly pivoting toward AI development efforts

Smartphone display with logo of Facebook, WhatsApp and Instagram apps in hand against blurred META logotype on white monitor background: Tallinn, Estonia – October 29, 2021

Shares of Meta Platforms leaped to a new intraday high in morning trading Friday after the Facebook and Instagram parent reported a better-than-expected fourth quarter and said it was accelerating its efforts in artificial intelligence.

Investors also cheered the company’s initiation of a dividend, promising a healthy 50-cents-per-share payout to shareholders.

Shares gained $82.67, or 20.9%, to $477.45 in late morning trading, after earlier touching $479.50, the highest point ever for the stock, which is already up 38% since the start of the year.

Late Thursday, Meta reported that its revenue for the last three months of 2023 rose 25% to $40.11 billion, reflecting strong advertising results that bucked larger trends. The company saw profit increase threefold to $14.02 billion as daily active users jumped by 8% to 3.19 billion. The results all topped Wall Street projections, results the company attributed in part to its strides in AI technology.

“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta founder and CEO Mark Zuckerberg said in the shareholder statement. The company expects to pour between $30 billion and $37 billion on capital expenditures in 2024, with AI a growing area of investment.

The results drove at least 30 Wall Street analysts to raise their price targets on the stock, though the prices set by many were already surpassed in Friday morning’s run. Analysts set their targets based on their growth projections for an entire year.

RBC Capital, for instance, upped its target to $565 from $400.

The analyst wrote in a note to clients that years from now, this quarterly report may be looked at as the moment Meta expanded from being looked as the leading social advertising player to “layering on a leading GenAI-focused cloud intelligence business,” according to TheFly.com.

Morgan Stanley set a $510 target, up from $435, and pointed to the dividend and the authorization of an additional $50 billion in stock buybacks as improving the outlook above and beyond the strong results and guidance for the current quarter.

The highest price target, $575, was set by analysts at both Mizuho and KeyBanc. The KeyBanc note said Meta’s fourth-quarter report allayed concerns that advertising revenue would decelerate in 2024 and also demonstrated sound capital allocation, noting that Meta’s investments also being met with clear returns.

On the opposite end, Goldman Sachs raised its target to just $500, with a “Buy” rating. The firm said is more concerned about decelerating revenue, but that the quarter ” there will likely be debates about the potential of how Meta’s revenue run rate might decelerate throughout 2024, the earnings report “allows investors to put prior questions around platform strength behind.”

Shares of Amazon, which also reported strong results for the quarter and said it increased content spending by 14% to $18.9 billion, also gained in morning trading. The stock added $11.69, or 7.3%, to $170.97, up about 14% since the start of the year.

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