As social media giant Meta released its "strongest ever" financial report, the company's stock price surged by over 20% in a single day.
On February 2nd local time, Meta (Nasdaq: META) rose 23.10% in intraday trading and closed at $474.99 per share, up 20.32%. Its total market value reached $1.22 trillion, an increase of nearly $200 billion (approximately RMB 1.4 trillion) in one day, setting the highest daily market value increase in US stock history. Since hitting bottom in November 2022, Meta's stock price has soared by over 300%, surpassing all stocks in the S&P 500 index except Nvidia.
Meta's stock price trend in the past six months
The day before, Meta announced its fourth quarter financial performance for the fiscal year 2023 as of December 31 last year, with a revenue of $40.111 billion, a 25% increase from the same period last year and higher than market expectations of $38.9 billion; Net profit increased by 201% year-on-year to $14.017 billion, higher than market expectations of $12.89 billion; Diluted earnings per share increased by 203% year-on-year to $5.33, higher than market expectations of $4.95.
Meta achieved a 25% revenue growth in the fourth quarter, marking the company's largest revenue growth since the third quarter of 2021. Meta has also provided optimistic guidance for the next fiscal quarter, predicting that the company's revenue will reach between $34.5 billion and $37 billion in the first quarter of 2024, higher than analysts' expectations of $33.64 billion.
In addition, Meta has prepared additional surprises for investors by announcing an increase of $50 billion in stock repurchases.
Based on a market value of $1 trillion on February 1st, Meta's expanded repurchase authorization is equivalent to about 5% of the outstanding shares. The company's last authorized repurchase of this scale was in October 2021. Meta will also make its first-ever dividend payout in March this year, including Class A and Class B common shares, with a cash payout of $0.5 per share.
Analysis indicates that Meta's dividend payout can attract institutional investors and reflect Zuckerberg's confidence in Meta's prospects. Furthermore, considering that some tech giants, including Amazon and Google's parent company Alphabet, have never paid dividends, this move may stimulate them to take similar measures.
After the release of Meta's financial report, Mark Mahaney, an analyst at Evercore ISI, a US investment bank, reiterated their bullish view on Meta stocks and gave a "buy" rating: "This is one of the most impressive quarterly financial reports, both fundamentally and compared to expectations."
Morgan Stanley analyst Brian Nowak wrote in a report, "Meta (in its financial report) has demonstrated robust execution, accelerated growth rate, and improved capital structure efficiency, all of which will improve the company's future prospects."
Meta's emphasis on AI (Artificial Intelligence) investment has also fueled market optimism. At the post earnings conference call, the company expects its capital expenditures for the full year of 2024 to be between $30 billion and $37 billion, an increase from the guidance given three months ago of $30 billion to $35 billion.
Meta CEO Mark Zuckerberg emphasized that training and running AI models will "require more computing resources" in the future, which means the company may need to purchase more GPUs: "We aim to win in AI and will continue to invest on a large scale in this field."
In the field of AI, as the big models of OpenAI and other companies such as Google become increasingly "closed", Meta chose a unique open source approach and launched the widely influential Llama series of models. For this choice, Meta also admitted during the post earnings conference call that the open source choice has helped the company improve its basic models and brought several strategic advantages to the company, such as promoting open source models to maintain security and become industry standards, and recruiting the best talents for Meta.