Meta Platforms (META) surged, adding a record-breaking $196 billion to its market value in the largest one-day gain for any company in Wall Street history. This monumental jump follows the Facebook parent's announcement of its first-ever dividend payout and impressive financial results.
Meta's stock soared by 20.3% during the session, marking its most significant one-day percentage rise in a year and the third largest since its debut on Wall Street in 2012. With this surge, Meta's market value now exceeds $1.22 trillion.
In anticipation of Facebook's 20th anniversary, Meta recently authorized an additional $50 billion in share repurchases and declared a quarterly dividend of 50 cents per share.
Despite dividends traditionally being associated with mature, slow-growth companies, Meta joins the ranks of Wall Street's most valuable technology-related heavyweights, including Apple, Microsoft, and Nvidia, in offering dividends.
Analyst Dan Coatsworth from AJ Bell noted, "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."
This surge in Meta's market capitalization surpasses the previous record set by Amazon on Feb. 4, 2022, when its market value surged by $190 billion following a strong quarterly report. Conversely, Meta suffered a historic loss of over $200 billion in value one day prior, the largest loss in U.S. stock market history, after issuing a dismal forecast.
Meta's dividend plan implies a substantial payout for CEO Mark Zuckerberg, who owns approximately 350 million Meta Class A and Class B shares, potentially earning around $175 million every quarter.
Optimism surrounding the potential of artificial intelligence contributed to a 24% rally in the S&P 500 last year, with Meta, Nvidia, Microsoft, and Broadcom recently hitting record highs. Following Friday's gain, Meta's stock is up 35% in 2024.
Meta reported strong ad sales and a rebound in user growth during its fourth-quarter results, leading to a 25% surge in revenue. Its forecast for current-quarter revenue also surpassed analysts' expectations.
The combination of surging revenue and an 8% reduction in costs and expenses, achieved through eliminating more than 21,000 jobs since late 2022, enabled Meta to triple its net income to $14.02 billion.
Jasmine Enberg, principal analyst at Insider Intelligence, commented, "The 'Year of Efficiency' has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue."
While Meta's dividend may be relatively small compared to many companies, it could enhance the appeal of its stock to a wider range of investors, including exchange-traded funds focused on dividend-paying stocks.