Meta detaches the dividend, but the real revolution is artificial intelligence
A coupon will be issued for the first time. The group has reduced costs, focusing on its historical business. The risk is on the regulatory front
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6' min read
On the one hand, the restructuring of the business, largely behind us, and the announcement of the first dividend. On the other, the push on artificial intelligence to optimise products. All this with the sword of Damocles of regulatory tightening in various jurisdictions. These are among the conditions that characterise the business of Meta Platforms (formerly Facebook).
The Stock Exchange Accounts
.The group, founded by Mark Zuckerberg, recently released its numbers for the last quarter of 2023. The figures were positive and above expectations. Global sales rose to USD 40.1 billion (+22% compared to the same period in 2022 and at constant exchange rates). Net profit, for its part, stood at USD 14.017 billion (it had been USD 4.6 billion twelve months earlier). The stock market appreciated the accounts, so much so that - in the single session following the quarterly report in which its first dividend was also announced - Meta gained over 20%. A performance that has pushed the share price further into 2024: since the beginning of the year, the rise has reached 37.6% (closing on 27/2/2024). The rally, however, is not limited to the most recent months. Looking at the last year, the former Facebook has a positive result of 178.4%. Is this surprising? The answer is negative. The decision to restructure and streamline the business - as well as to take advantage of artificial intelligence (AI) - had a favourable effect on the income statement for 2023. For the whole year, the turnover is EUR 134.9 billion, an increase of 16% compared to 2022. Net profitability, a consequence of the same cost streamlining, rose by 69%, while the operating margin increased from 25% two years ago to 35% at 31/12/2023. In short: the dynamics of the fundamentals have, to some extent, followed - and supported - the stock on the list.
The reorganisation
.The main elements of the described scenario include two aspects: the first is the re-focusing, at the expense of the Metaverse (at least in the short term) on the core business of apps (from Facebbok to Instragram to WhatsApp). The second is precisely the slimming-down cure imposed on the company from 2022 and pursued vigorously in 2023 (the year of 'efficiency').
Precisely on the latter front, the grounding of the various measures can, in an indirect manner, be deduced from cost dynamics. In general, last year's operating expenses - despite the growth in turnover - remained more or less unchanged (+0.5%). The dynamic in question, on closer inspection, is the effect of a mix of causes. On the one hand, there is the expansion of expenditure on data centres and technical infrastructure (cost of sales). On top of this is the increased expenditure on research and development. On the other hand, as a counterbalance, one has to remember the decrease of outlays in marketing and administrative overheads. Overall - also bearing in mind the dismissal of some 20,000 employees - the strategy seemed reasonable to the market. Quite apart from the fact that the stock market (unfortunately) always 'likes' the reduction of the workforce base, investors rewarded the willingness to keep the bar straight on technological aspects and, on the contrary, to contain expenditure in less vital areas.
Back to tradition
.Just as the market appreciated the re-focusing, after the Metaverse hangover - which led to the company's name change - on traditional activities. Namely: the family of various social networks (from Facebook to Instagram to the WhatsApp app).
