Meta Platforms witnessed its stock market value surge by $196 billion in a single day, marking the largest one-day gain in Wall Street history. This remarkable increase followed the announcement of Meta’s first dividend and strong financial results.
The company’s shares soared by 20.3%, recording the most substantial one-day percentage increase in a year and the third-largest since its debut on Wall Street in 2012. With this surge, Meta’s market value has now exceeded $1.22 trillion.
Just ahead of Facebook’s 20th anniversary, Meta authorized an additional $50 billion in share repurchases and declared a quarterly dividend of 50 cents per share. While dividends are typically associated with more established, slower-growing companies, Meta joins the ranks of major technology companies, including Apple, Microsoft, and Nvidia, offering such payouts.
Analysts see the decision to pay dividends as a move to enhance Meta’s reputation and be taken more seriously, although some consider the amount to be more symbolic. The increase in market capitalization on this particular Friday surpassed the previous record set by Amazon in February 2022. Interestingly, just a day prior, Meta experienced the largest loss in U.S. stock market history, losing over $200 billion in value after issuing a disappointing forecast.
The dividend plan is set to result in a substantial payout for Meta’s CEO, Mark Zuckerberg, who holds approximately 350 million Meta Class A and Class B shares, potentially earning around $175 million every quarter.
The optimism surrounding artificial intelligence’s potential contributed to a 24% rally in the S&P 500 the previous year, with Meta, Nvidia, Microsoft, and Broadcom reaching record highs. Following Friday’s gain, Meta’s stock is up by 35% in the year 2024.
Meta’s strong fourth-quarter results highlighted robust ad sales and a rebound in user growth, leading to a 25% surge in revenue. The company managed to triple its net income to $14.02 billion by reducing costs and expenses by 8%, achieved through workforce reductions since late 2022.
While Meta’s dividend may seem modest compared to other companies, it could make its stock more appealing to a broader range of investors, including those focused on dividend-paying stocks through exchange-traded funds (ETFs). Meta’s dividend yield, standing at about 0.4% after Friday’s stock rally, is competitive with other tech giants like Apple, Microsoft, and Nvidia.
Investors who prioritize dividends and steady income may find Meta’s stock more attractive, potentially leading to increased interest from ETFs that focus on U.S. dividend payers. Meta has been investing billions to enhance its computing capacity for generative AI products across its platforms and hardware devices like Ray-Ban smart glasses over the past decade.