Meta, owner of Facebook and Instagram, is worth almost US$200 billion in one day

Meta, owner of Facebook and Instagram, is worth almost US$200 billion in one day
Meta, owner of Facebook and Instagram, is worth almost US$200 billion in one day
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Reuters – Meta Platforms added $196 billion in market value on Friday, marking the biggest one-day gain by any company in Wall Street history after Facebook’s parent company declared its first dividend and reported robust results. Shares of Meta (META.O) soared 20.3% during the session, also recording its largest single-day percentage increase in a year and third-largest since its Wall Street debut in 2012. Its market cap now exceeds US$1.22 trillion.

Days before Facebook’s 20th anniversary, Meta on Thursday authorized an additional $50 billion worth of share repurchases and said its quarterly dividend will be 50 cents per share. While dividends are associated with mature, slow-growing companies, Meta’s is the fourth offered by Wall Street’s most valuable tech giants, along with Apple (AAPL.O), Microsoft (MSFT.O) and Nvidia (NVDA). O). “Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously. But ultimately the amount paid is just a symbolic gesture,” said Dan Coatsworth, investment analyst at AJ Bell.

The increase in Meta’s market capitalization on Friday surpassed the previous record held by Amazon (AMZN.O), which saw its market value soar by $190 billion on February 4, 2022, following a spectacular quarterly report. A day earlier, Meta lost more than $200 billion in value, the biggest loss in U.S. stock market history, after issuing a grim forecast. Meta’s dividend plan means a substantial payout for CEO Mark Zuckerberg, who owns about 350 million Class A and Class B shares of Meta. The Facebook co-founder could receive around $175 million each quarter.

Optimism regarding the potential of artificial intelligence contributed to a 24% rally in the S&P 500 (.SPX) last year, with Meta, Nvidia, Microsoft and Broadcom (AVGO.O) recently hitting all-time highs. With Friday’s gain, Meta is now up 35% for 2024. The world’s largest social media company signaled strong ad sales and a resurgence in user growth during its fourth-quarter results, which saw its revenue shoot 25%. Its forecast for current quarter revenue also beat analysts’ estimates.

CONTINUES AFTER RECOMMENDATIONS

Rising revenue, combined with an 8% drop in costs and expenses following the elimination of more than 21,000 jobs since the end of 2022, has allowed Meta to triple its net profit to $14.02 billion. “The ‘Year of Efficiency’ bore fruit, with both headcount and costs decreasing, and Meta exceeding our expectations for full-year 2023 advertising revenue,” said Jasmine Enberg, principal analyst at Insider Intelligence.

While Meta’s dividend is small compared to many companies, it could make its shares more attractive to a broader audience of investors, including index 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 less than 0.1%, according to LSEG. “This could start to attract investors who are really looking for dividends and a more stable income,” said Brian Jacobsen, chief economist at Annex Wealth Management.

U.S. dividend-paying exchange-traded funds (ETFs) have assets of more than $400 billion, representing just over 5% of the entire domestic ETF universe, according to data from Morningstar Direct. Meta has spent billions of dollars over the past decade to increase its computing power for generative AI products it is adding to Facebook, Instagram and WhatsApp, and for hardware devices like its Ray-Ban smart glasses.

The article is in Portuguese

Tags: Meta owner Facebook Instagram worth US200 billion day

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