Meta Platforms, the parent company of Facebook, experienced an unprecedented surge in its stock market value, gaining a record $196 billion in a single day. This marks the largest one-day increase by any company in Wall Street history. The surge followed Meta’s announcement of its first dividend and robust financial results. Meta’s stock soared by 20.3% during the session, achieving its most significant one-day percentage increase in a year and the third largest since its 2012 debut on Wall Street. As a result, Meta’s current stock market value stands at over $1.22 trillion.
Just days before Facebook’s 20th anniversary, Meta authorized an additional $50 billion in share repurchases and declared a quarterly dividend of 50 cents per share. This move aligns Meta with other tech giants such as Apple, Microsoft, and Nvidia, which also offer dividends.
“Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously. But ultimately the amount being paid is only a token gesture,” commented Dan Coatsworth, an investment analyst at AJ Bell. Meta’s dividend plan will result in a substantial payout for CEO Mark Zuckerberg, who owns approximately 350 million Meta Class A and Class B shares, potentially receiving around $175 million every quarter.
The surge in Meta’s market capitalization on Friday surpassed the previous record held by Amazon, which experienced a $190 billion increase on February 4, 2022, following an outstanding quarterly report. Notably, Meta faced a historic loss of over $200 billion in value just one day prior, marking the biggest loss in U.S. stock market history after issuing a dismal forecast.
While Meta’s dividend yield is relatively small at about 0.4%, it could enhance the company’s appeal to a broader investor base, including those focused on dividends. Comparatively, Apple’s dividend yield is about 0.5%, Microsoft’s is 0.7%, and Nvidia’s is under 0.1%.
Meta’s strong performance in 2023, marked by robust ad sales and a rebound in user growth, contributed to the surge in revenue. The company’s net income tripled to $14.02 billion, benefiting from an 8% drop in costs and expenses due to significant job cuts since late 2022.
“The ‘Year of Efficiency’ has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue,” noted Jasmine Enberg, principal analyst at Insider Intelligence.
While Meta’s dividend is comparatively modest, it has the potential to attract a new investor demographic seeking more steady income, including those investing in dividend-focused exchange-traded funds (ETFs). ETFs centered on U.S. dividend payers currently hold assets exceeding $400 billion, representing just over 5% of the entire domestic ETF universe, according to Morningstar Direct.
