Meta stock surged Friday to a record high closing price after what one analyst called a "monumental" earnings report, which included the Facebook parent company announcing its first ever dividend.
Meta Platforms said late Thursday that it earned $5.33 per share on sales of $40.1 billion for the December-ending quarter. Analysts projected the company would post earnings of $4.82 per share on $39.1 billion in sales, according to FactSet.
Sales for the quarter increased 25% year over year, while earnings increased 203%.
Further, Meta said it is initiating a dividend of 50 cents per share of common stock, payable on March 26 to shareholders on record as of Feb. 22.
For the current quarter, Meta projected sales between $34.5 billion and $37 billion. Heading into the report, analysts were looking for $33.9 billion in Meta sales for the March quarter, according to FactSet.
On the stock market today, Meta stock rocketed 20% higher to close at 474. That easily surpassed Meta's previous highest-ever close of 401.02 on Monday.
"We had a good quarter as our community and business continue to grow," Meta Chief Executive Mark Zuckerberg said in a news release. "We've made a lot of progress on our vision for advancing AI and the metaverse."
Meta Earnings Climb After Year Of Efficiency
For the full year, Meta earned $14.87 per share, up 73% from 2022. In 2022, Meta's previously huge earnings decreased 37% year over year.
For the fourth quarter, expenses decreased 8% year over year to $23 billion. Operating margin jumped to 41% from 20% in the fourth quarter of 2022.
Meta made significant cost cuts last year, including layoffs, as part of what Zuckerberg deemed a "Year of Efficiency."
On the company's call with analysts Thursday, Zuckerberg said "being a leaner company is helping us execute better and faster, and we will continue to carry these values forward as a permanent part of how we operate."
Meta's Big AI Push
Zuckerberg made clear, however, the key areas where Meta will spend big. First and foremost: artificial intelligence.
"Moving forward, a major goal will be building the most popular and most advanced AI products and services," Zuckerberg told analysts. "And if we succeed, everyone who uses our services will have a world-class AI assistant to help get things done."
Meta launched a series of AI-powered chatbots late last year.
The Facebook founder on Thursday reiterated his plan to utilize 350,000 Nvidia H100 AI-specialized computing chips, and overall compute power equivalent to 600,000 H100 chips. Zuckerberg first provided those numbers last month in an Instagram post.
Further, Meta raised the high-end of its capital expenditures guidance for 2024 to a range between $30 billion and $37 billion.
"Our expectation is generally that we will need to invest more to support our AI work in the years ahead, and we're seeing some of that reflected in 2024," Chief Financial Officer Susan Li told analysts.
Analysts Hike Meta Stock Targets
Wall Street analysts responded to Meta's report by raising their price targets significantly. Stifel analyst Mark Kelley, who rates Meta a buy, jumped his 12-month price target from 405 to 527, implying 33% upside from Meta's closing price Thursday.
"The company is firing on all cylinders and continues to hammer home the notion that this will be a more efficient and leaner organization going forward, despite the heavy AI investment cycle that is well underway" Kelley wrote. He titled the client note "A Monumental Quarter."
BofA Securities analyst Justin Post, meanwhile, set a price target of 510, up from 425.
"We believe Reels, Messaging, and AI driven ad improvements (content creation, measurement, etc.) are still early, and could drive further upside in 2024," Post wrote. "Moreover, with a large capex budget, internal AI supercomputer, in-house (large language model) and custom AI chips, we think Meta's AI assets are underappreciated in the stock price."
Meta Q4 By The Numbers
Monthly active users for Facebook grew 3% year over year to 3.07 billion, Meta said.
As is typical, digital advertising sales drove nearly all of Meta's revenue. The company recorded $38.7 billion in ad sales for the quarter, up 24% from the same period last year.
However, the metaverse-focused Reality Labs division surpassed $1 billion in quarterly revenue for the first time. Meta launched sales for its latest virtual-reality headset last fall. Still, the division posted a loss of $4.6 billion, adding to the huge losses from the company's metaverse bets.
On the other hand, Meta's Family of Apps generated $21 billion income in the quarter, compared to $10.7 billion in the fourth quarter of 2022. The Family of Apps includes Facebook, Instagram, WhatsApp, Reels and Threads.
Meta ended 2023 with 67,317 employees, the company said, down 22% from the start of the year.
Meta Stock: Up 30% This Year
With the huge jump Friday, Meta stock is now up more than 30% this year. That has helped build off a 194% surge last year.
In January, Meta reached a market capitalization over $1 trillion, rejoining an exclusive club of tech giants.
Meanwhile, Meta Platforms is on the IBD 50 list of top growth stocks. It's also on the leaders list of the IBD Leaderboard premium stock-ideas service. IBD Stock Checkup shows Meta with a Relative Strength Rating of 96 as of Thursday, indicating it has outperformed 96% of all stocks in the past 12 months.
Meta also boasts a highest-possible 99 IBD Composite Rating, which reflects strength across a number of technical and fundamental metrics linked to strong stock performance.
