Meta’s stock is surging. What’s behind the jump?

globalnews.ca:

Meta surged more than 17 per cent on Friday as the Facebook parent’s first dividend declaration and robust results increased expectations of strong returns from its investments in “metaverse” technologies and artificial intelligence infrastructure.

Days ahead of Facebook’s 20th anniversary, Meta authorized an additional US$50 billion in share repurchases and said its quarterly dividend would be 50 cents per share.

The social media giant is the first of its generation of internet juggernauts to issue a dividend, and the fourth from the so-called “Magnificent Seven” stocks, with its yield of 0.51% matching that of Apple, according to LSEG data.

“The returning of cash to shareholders is a bold and well-regarded move. The amount of free cash pumping through the business means it is more than able to afford it, and it helps pay investors for their patience,” Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said.

The new dividend plan would also mean a hefty payout for CEO Mark Zuckerberg, who owns about 350 million Meta Class A and Class B shares. The Facebook co-founder could get about $175 million every quarter.

“Meta’s strategy of announcing buybacks and dividends right before the Fed begins to cut rates is a brilliant move. As the battle for innovation grows … in the Big Tech space, investors will see any extra capital as dry powder for future earnings growth,” said Thomas Monteiro, analyst at Investing.com.

The company flagged strong ad sales and a rebound in user growth during its fourth-quarter results on Thursday, while also forecasting current-quarter revenue above analysts’ estimates.

“Revenue growth and guidance likely put to rest the biggest hang-up of owning Meta … but we were more impressed with