The first dividend for shareholders of Meta Platforms Inc., the massive social media company, may entitle CEO Mark Zuckerberg to an annual payment of about $700 million. A quarterly cash dividend of fifty cents per share for Class A and B common stock, starting in March, was announced by the company on Thursday. Based on data compiled by Bloomberg, Zuckerberg would receive approximately $175 million in quarterly payments before taxes, assuming he owned approximately 350 million shares.
This action conveys the company’s view of its growth potential. Tech companies that are growing quickly often forego paying dividends in favor of reinvesting profits in costly acquisitions or product development. Although Meta is investing a lot of money in AI projects, it has been unable to make large acquisitions due to legal issues.
Over 200% more profit, or $14 billion, was made in the three months that ended in December than was predicted by Wall Street analysts. The majority of the revenue came from digital advertising sales, which increased to more than $40 billion from a year earlier, a 25% increase. For the first time, the Reality Labs division’s revenue exceeded $1 billion due to stronger sales of its most recent virtual reality headset.
The solid results and dividend initiation sent Meta’s stock surging, with shares up 109.1% in the past 12 months, outpacing the S&P 500’s 17.4% gain. Meta’s ad-sales gains helped it meet or exceed its guidance for the first quarter. However, it said it was difficult to predict performance for the rest of the year because of European political events and regulatory pressure in the United States.
Amid the strong results, Meta also announced that it was adjusting some of its reporting practices to reflect its business better. It will no longer report daily and monthly active users and instead focus on advertising impressions and prices. It will also focus on local ad sales and reporting revenue by region, which it says will be more helpful for investors to understand its business.
It was the fourth quarter of positive financial results for Meta, which has attributed much of its recent success to its self-described “year of efficiency.” Last year, the company laid off about 21,000 employees and narrowed its focus to reduce costs and boost profitability. The results have paid off — the company’s stock almost tripled in value in 2023. Introducing a dividend and an extra $50 billion for share buybacks, which were announced alongside Thursday’s favorable result, might encourage more patience from investors, supporting Zuckerberg’s long-term bets on artificial intelligence and the metaverse.