Meta escalates with record $196 billion gain in stock market value

Market Valuation: Tech conglomerate Meta Platforms has added $196 billion in stock market value, marking the biggest one-day gain by any company in Wall Street history, after the parent firm of Facebook declared its first dividend and posted robust results.

Meta's stock surged 20.3 per cent for the session on Friday, also recording its biggest one-day percentage increase in a year and its third biggest since its 2012 Wall Street debut. Its stock market value now stands at more than $1.22 trillion.

Days ahead of Facebook's 20th anniversary, Meta late on Thursday authorized an additional $50 billion in share repurchases and said its quarterly dividend would be 50 cents per share.

Meta Dividends

While dividends are associated with mature, slow-growth companies, Meta's is the fourth offered by Wall Street's most valuable technology-related heavyweights, along with Apple, Microsoft, and Nvidia.

Dan Coatsworth, an investment analyst at AJ Bell, said: "Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously. But ultimately the amount being paid is only a token gesture."

Market capitalisation

Friday's increase in Meta's market capitalisation eclipsed the previous record held by Amazon, in which the tech giant saw its market value surge by $190 billion on February 4, 2022, following a blowout quarterly report.

A day before, Meta lost over $200 billion in value, the biggest loss in US stock market history, after it issued a dismal forecast.

Meta's dividend plan means a hefty payout for CEO Mark Zuckerberg, who owns about 350 million Meta Class A and Class B shares. The Meta co-founder could get about $175 million every quarter.

Optimism about the potential for artificial intelligence contributed to a 24 per cent rally in the S&P 500.

SPX last year, with Meta, Nvidia, Microsoft and Broadcom recently hitting record highs. With Friday's gain, Meta is now up 35 per cent in 2024.

Revenue boost

The world's biggest social media company flagged strong ad sales and a rebound in user growth during its fourth-quarter results that saw its revenue surge 25 per cent. Its forecast for current-quarter revenue also exceeded analysts' estimates.

Surging revenue, combined with an 8 per cent drop in costs and expenses after eliminating more than 21,000 jobs since late 2022, allowed Meta to triple its net income to $14.02 billion.

"The 'Year of Efficiency' has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue," said Jasmine Enberg, principal analyst at Insider Intelligence.

While Meta's dividend is small compared to many companies, it could make its stock more attractive to a broader swathe of investors, including exchange-traded funds focused on stocks that pay dividends.

Meta's dividend yield is about 0.4 per cent following Friday's stock rally, as against Apple's dividend yield which is about 0.5 per cent, while Microsoft's is 0.7 per cent and Nvidia's is under 0.1 per cent, according to LSEG.

Brian Jacobsen, Chief Economist at Annex Wealth Management, said: "This can start attracting investors who really do look for dividends and more steady income."