Record High Stock Price on Strong Performance... Meta Celebrates First Dividend 'Toast'

Zuckerberg [Image source=Yonhap News]

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Meta, the parent company of Facebook and Instagram, is set to pay dividends for the first time since its founding. This comes as the company continues to deliver strong earnings that exceed market expectations. On the 1st (local time), after the New York Stock Exchange closed, Meta's stock price surged more than 14% in after-hours trading, reaching a new all-time high.

According to Meta, its revenue for the fourth quarter of last year increased by 25% year-over-year to $40.1 billion. During the same period, gross profit rose 201% to $14 billion. These figures surpassed market forecasts of $39.1 billion and $13 billion, respectively.

Mark Zuckerberg, CEO, named 2023 the "Year of Efficiency," and the effects of workforce and cost reductions have become evident. The company also strengthened ad targeting by proactively leveraging the AI-driven revolution. Among Meta's core businesses, the Reality Labs segment, which focuses on the metaverse (extended virtual world), recorded revenue just over $1 billion. Despite a loss of $4.65 billion, the market impact was minimal.

Fueled by strong earnings, Meta's move to return value to shareholders sparked enthusiasm in the market. Meta announced it would pay its first-ever dividend since the company's establishment. The dividend will be paid at 50 cents per share. Additionally, Meta plans to repurchase $50 billion worth of its own shares. Meta's stock, which closed up 1.2% that day, jumped 14% in after-hours trading. It is expected to hit an all-time high in the New York Stock Exchange on the 2nd.

The market expects Meta to deliver strong performance this year, driven by cost savings through AI utilization. This comes despite overcoming political pressure related to risks inherent in social networking services (SNS), such as issues with explicit deepfakes.

In May last year, Meta announced plans to develop its own AI semiconductor chip called ‘MTIA,’ and the second-generation chip following MTIA is scheduled to be installed in data centers for the first time this year. Internally named ‘Artemis,’ this new chip supports inference, which requires AI models to use algorithms to rank and generate responses to user prompts, similar to MTIA.

Through the practical deployment of Artemis, Meta expects to reduce its dependence on Nvidia, which currently dominates the AI chip market, and cut the enormous costs involved in launching AI products. CEO Zuckerberg plans to double AI-related investments this year to build a general artificial intelligence (AGI) that approaches or surpasses human intelligence in most areas independently.

Thanks to strong digital advertising, Meta projected first-quarter revenue between $34.5 billion and $37 billion this year. This significantly exceeds Wall Street analysts’ estimates of $33.9 billion.

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