- Meta Platforms soared 20% on Friday after the company reported blowout 4th-quarter earnings.
- The social media platform announced its first-ever dividend and a massive $50 billion stock buyback.
- Here's what Wall Street is saying about Meta's fourth-quarter earnings results.
Meta Platforms soared 20% on Friday after the social media giant announced a blowout fourth-quarter earnings report.
The company reported a 25% year-over-year surge in revenue to $40.1 billion, which beat analyst estimates by nearly $1 billion. Meta's GAAP earnings per share of $5.33 beat estimates by $0.39.
Meanwhile, guidance from Meta was also strong, with the company forecasting first-quarter revenue of $34.5 billion to $37 billion, well ahead of analyst estimates of $33.9 billion.
"Last year, not only did we achieve our efficiency goals, but we returned to strong revenue growth, saw strong engagement across our apps, shipped a number of exciting new products like Threads, Ray-Ban Meta smart glasses and mixed reality in Quest 3, and of course, established a world-class AI effort that's going to be the foundation for many of our future products," Meta Platforms founder Mark Zuckerberg said on the earnings call.
The massive gain in Meta stock on Friday added nearly $200 billion to the company's market valuation. Part of that gain was sparked by Meta initiating its first-ever quarterly dividend of $0.50 per share, as well as a massive $50 billion stock buyback program.
Here's what Wall Street is saying about Meta's fourth-quarter earnings results.
Bank of America: 'AI capabilities driving ad improvements'
Meta Platforms' focus on artificial intelligence during the earnings call reinforced to Bank of America that there could be "positive product surprises" in the future.
Meta detailed its plans to develop in-house AI chips, a general intelligence platform, and advanced AI products and services for users, creators, and businesses.
"We believe Meta's growing AI focus could lead to positive product surprises in coming quarters and drive multiple expansion if the company can evolve into a content and business services platform," Bank of America said in a Friday note.
The bank sees further upside for Meta stock, even after its massive 20% surge on Friday, largely thanks to the company's focus on developing AI technologies.
"With a large capex budget, internal AI supercomputer, inhouse LLM and custom AI chips, we think Meta's AI assets are underappreciated in the stock price," Bank of America said.
Bank of America reiterated its "Buy" rating and increased its price target to $510 from $425.
Goldman Sachs: 'Management's tone leaves us with increased confidence'
Goldman Sachs said Meta is exiting its "year of efficiency" with a leaner organization driving product innovations and accelerated revenue growth.
"For the second consecutive quarter, management's tone leaves us with increased confidence in a balance being struck across current period growth opportunities, long-term growth opportunities and capital returns," Goldman said.
The bank said it sees encouraging momentum across Meta's key product initiatives, which include Reels, click-to-messaging Ads, and AI products like Advantage+.
"We continue to see META as well-positioned against several long-term secular growth themes and are encouraged by the positive momentum across key product initiatives," Goldman Sachs said.
Goldman Sachs reiterated its "Buy" rating and increased its price target to $500 from $414.
JPMorgan: 'Revenue acceleration and quarterly dividend highlight strong results'
Meta's headcount is down 22% year-over-year, which makes its fourth-quarter results all the more impressive, according to a Friday note from JPMorgan.
The bank said it's clear that Meta is "executing extremely well" while it continues to invest aggressively in important long-term initiatives.
"Meta's strong growth and leverage within core Family of Apps, combined with the initiation of a quarterly dividend, give the company more room to invest in critical long-term technologies in general intelligence and the metaverse," JPMorgan said.
The bank said that while Meta increased its guidance for 2024 capital expenditures by $2 billion, it was still less than what it had expected, highlighting the lingering impact of the company's "year of efficiency."
"AI is driving strong ad conversion benefits and content engagement, while Reels and Messaging ads are growing rapidly," JPMorgan observed.
The bank also said that Meta's new dividend and stock buyback program will open the company up to a wider base of potential shareholders.
JPMorgan reiterated its "Overweight" rating and increased its price target to $535 from $420.