Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB) has essentially just fulfilled the definition of a company that has gone ex-growth – and it has beat this path to maturity in less than two decades.
After hours, the Facebook owner said it would pay its first ever dividend, which in Silicon Valley terms is the equivalent of running up the white flag of surrender.
It means boss and founder Mark Zuckerberg is unable to deploy its free cash in more productive ways to fund growth – both internally, or by acquisition.
That said, there looks to be plenty left in the bank - after the 50 cents a share payout and $50 billion stock buyback programme - to pick off the tech sector’s small fry.
And in fact, Meta’s story definitely isn’t one of a business topping out – it reflects an unexpected return to financial form for the oft-criticised social media giant.
And rather than balk, investors and analysts seemed to love the dividend move. Meta’s stock jumped 15%, pushing the value of the business above the $1 trillion mark again.
For founder Zuckerberg, this first cash distribution should net him in excess of $150 million.
That may sound a lot. But for ‘Zuck’ it is small beer compared with the value of his Meta holding, which is worth about $130 billion.
He reduced that stake (marginally) late last year by cashing in 1.8 million shares for $428 million.
Underpinning Meta’s ability to make its first dividend payment was a stellar final quarter financially, which smashed Wall Street’s forecasts.
Revenues were a ‘smidge’ over $40 billion, up 25% year over year, while earnings grew 200% to $14 billion. Both figures were around $1 billion ahead of consensus estimates.
For the current quarter, Meta expects its turnover to be $34.5-$37 billion, which again is in excess of analysts' expectations.
Underpinning this was a "broad-based" increase in advertiser demand, said the research team at investment bank Oppenheimer.
Analysts believe the numbers will alleviate the pressure on Zuckerberg and the team to roll out new artificial intelligence (AI) initiatives.
Meta is reportedly developing AI assistants for advertisers and content creators, as well as users.
However, Susan Li, Meta’s chief operating officer, said: “We don’t expect our gen AI products to be a meaningful 2024 driver of revenue.”
In after-hours trading, the stock jumped over $60 a share to $454.85 as investors applauded the unexpectedly strong performance.
Oppenheimer will not have been alone in underestimating Meta’s financial performance.
In a note issued late last night, the investment bank unveiled estimate revisions alongside an increase in its share price target for Meta to $525 a share from the now-surpassed $385.