Meta Platforms has released its "strongest earnings report in history" and has also announced its "first-ever dividend"! The market is ecstatic about it.

On the eve of Meta Platforms' 20th anniversary, the parent company of Meta Platforms has released its strongest earnings report in history. The fourth-quarter performance and first-quarter guidance both exceeded Wall Street expectations. They also announced a $50 billion stock repurchase program and the first-ever dividend in history.

The market sentiment is high, with Meta Platforms' stock price soaring more than 15% after hours, and its market value surpassing $140 billion, which is more than 5 times the market value of its competitor Snap. Since hitting bottom in November 2022, Meta Platforms' stock price has risen more than 300%, outperforming all stocks in the S&P 500 index except for NVIDIA.

"Historic Dividend" + Large-scale Repurchase Plan

Meta Platforms will distribute dividends for the first time in its corporate history, with a dividend of $0.50 per share, which has shocked Wall Street.

This means that Meta Platforms will be on par with its peers Apple, Microsoft, and Oracle, all of which regularly pay dividends.

Some believe that this move may be the most significant dividend decision in Silicon Valley since Apple resumed dividend payments more than a decade ago, and it may prompt other tech giants to follow suit.

For example, Amazon and Alphabet-C, the two tech giants, have never paid dividends.

The dividend plan may attract more attention to Meta Platforms' stock on Wall Street, including the committee that selects components for the Dow Jones Industrial Average. Although the Dow Jones Index no longer requires candidate companies to pay dividends, paying dividends will certainly help restore Meta Platforms' stock price.In a conference call later, Meta Platforms was only asked about its dividend once.

CFO Susan Li stated that dividends provide the company with a more balanced capital return plan and add a certain level of flexibility.

The dividend will be paid in March to all shareholders who held stocks as of February 22nd. The board intends to distribute cash dividends on a quarterly basis based on market conditions.

Meta Platforms also announced an additional $50 billion stock repurchase, which, based on the current market value of $1 trillion, represents approximately 5% of the outstanding shares.

The last time Meta Platforms authorized a repurchase of this scale was in October 2021, when the company's social media applications experienced astonishing user growth.

Typically, fast-growing tech companies avoid issuing dividends and instead choose to use profits for developing new products or making significant acquisitions. Analysts believe that Meta Platforms' move conveys a signal about the company's potential. While it indicates management's optimism about growth prospects, it also implies limitations on the company's use of cash reserves.

Li stated that dividends "will not change the way we determine the total amount of capital to be returned. We expect stock repurchases to continue to be the primary way we return capital to shareholders."

"Strongest Earnings Report in History"

According to the earnings report, Meta Platforms' revenue in the fourth quarter was $40.11 billion, a 25% YoY increase, surpassing analysts' expectations of $39.01 billion.

Net profit in the fourth quarter was $14 billion, tripling YoY, with an EPS of $5.33, higher than analysts' expectations of $4.91.

Meta Platforms' earnings per share in the fourth quarter were $5.33, and the full-year earnings per share were $14.87, both setting new records for the company and exceeding analysts' expectations of $4.82 and $14.81, respectively.In addition, Meta Platforms reported a Q4 daily active user count of 2.11 billion, surpassing analysts' expectations of 2.07 billion. The monthly active user count for Q4 was 3.07 billion, also exceeding analysts' expectations of 3.06 billion.

Regarding this, Mark Mahaney, an analyst at Evercore ISI, said, "This is one of the most impressive quarters (earnings reports) both in essence and compared to expectations."

Meta Platforms is expected to generate revenue of $34.5 billion to $37 billion in Q1, higher than analysts' expectations of $33.64 billion. The company also expects to maintain overall expenses between $94 billion and $99 billion in 2024, while analysts predict $96.45 billion.

Full Speed Ahead into Artificial Intelligence

What excites Wall Street even more is that Meta Platforms, which previously suffered significant losses due to its bet on the metaverse, is now experiencing a revival in the field of artificial intelligence.

In a statement, Mark Zuckerberg said, "We had a good quarter, and our community and business continue to grow. We have made significant progress in advancing artificial intelligence and the metaverse vision."

It is reported that Meta Platforms' generative AI language model, Llama, is now being powered by its own chips.

Zuckerberg stated that this new generation of AI will generate a large number of helpful assistants, which will be one of the main values of AI in this generation. It is expected that Meta Platforms will expand the promotion of its AI assistants to more apps within Meta Platforms in late 2024.

According to a previous article by Wall Street News, Meta Platforms is currently training Llama 3. By the end of this year, Meta Platforms will have approximately 350,000 Nvidia H100 chips. If other GPUs are included, the equivalent computing power will be around 600,000 H100 chips.Zuckerberg also stated that the existing two AI research efforts (FAIR and GenAI) will be combined to "support our long-term goal of building general intelligence, responsibly open-source it, and make it accessible and useful to everyone in our daily lives."