Why Meta Platforms Stock Was Skyrocketing Today
Shares of Meta Platforms (NASDAQ: META) were having a day for the record books, as the Facebook parent delivered a smashing fourth-quarter earnings report, announced a massive share buyback, and declared a dividend for the first time. Its market cap gain of more than $200 billion is set to be the biggest one-day gain for an individual stock on record.
As of 1:12 p.m. ET, the stock was up 21.6%.
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Meta dazzles the market
It's rare for this big of a stock to see such a big single-day gain, but investors were thrilled with the fourth-quarter numbers and pleased with the dividend announcement. Overall, the report showed the company's "Year of Efficiency" changes continue to pay off beyond investor expectations.
Meta reported revenue growth of 25% to $40.1 billion, ahead of estimates at $39.2 billion and its fastest top-line growth in more than two years. Growth was driven by a 21% increase in ad impressions and a 2% increase in price per ad, as nearly all of its revenue comes from advertising.
Even better, Meta's costs actually fell, with total expenses down 8% to $23.7 billion, leading to a 156% jump in operating income to $16.4 billion. With the help of a lower tax rate, earnings per share (EPS) tripled from $1.76 to $5.33, which beat the consensus at $4.96.
The company also initiated a $0.50-per-share quarterly dividend. At that rate, its dividend yield is just 0.4%, but that's still a reward for shareholders.
CEO Mark Zuckerberg said, "We had a good quarter, as our community and business continue to grow. We've made a lot of progress on our vision for advancing AI and the metaverse."
Meta also increased its share repurchase authorization by $50 billion.
What's next for Meta Platforms?
Looking ahead to the first quarter, Meta expects revenue of $34.5 billion to $37 billion, which is well ahead of analyst expectations at $33.8 billion, showing that revenue growth is expected to hit 25% again.
Meta is clearly executing and benefiting from a recovery in the ad market. With costs under control, the stock should continue to move higher as profits grow.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Jeremy Bowman has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
