Overnight, the gods returned to their places, and the sky in Silicon Valley was bright again. On the day of the launch of Apple's first headset device, Vision Pro, Meta's stock price, which is regarded by the market as its main rival, soared by more than 20%, increasing its market value by more than $200 billion in one day, setting a record in the history of U.S. stocks. Behind the strong rally, Meta has indeed had an extraordinary year: the road to the metaverse has gone through twists and turns, and CEO Zuckerberg has always been unwilling to give up and is still looking for various new directions; took the AI express train, handed over the strongest financial report in history, and also paid dividends for the first time in history.
U.S. stocks rose in a record day.
After Microsoft broke history two weeks ago and became the second publicly traded company with a market capitalization of more than $3 trillion, Meta also ushered in the first highlight moment of 2024. On February 2, local time, Meta rose 2310% to close at 474$99, up 2032%, with a total market capitalization of 122 trillion US dollars, an increase of nearly 200 billion US dollars in one day.
This is also the highest one-day market value increase in the history of U.S. stocks. Previously, Apple's market value increased by $190.9 billion on November 10, 2022, Amazon's market value increased by $190.8 billion on February 4, 2022, and Nvidia increased by $184.1 billion on May 25, 2023. Since bottoming out in November 2022, Meta's share price has soared more than 300% to date, outpacing all of the S&P 500 except Nvidia**.
Meta's strong round of ** benefited from the after-hours earnings report of the U.S. stock market last Thursday. On the eve of Facebook's 20th anniversary, parent company Meta delivered its strongest earnings report ever, beating Wall Street's expectations for fourth-quarter results and first-quarter guidance. According to the financial report, Meta's revenue in the fourth quarter was 401$100 million, a 25% year-on-year increase, higher than analysts' expectations of 390$100 million.
Fourth-quarter net profit was $14 billion, a threefold surge year-on-year. In addition, the number of daily active users of Meta in the fourth quarter was 21100 million, higher than analysts' expectations of 20700 million; The number of monthly active users in the fourth quarter was 30700 million, higher than analysts' expectations of 30600 million.
Throttling vs. open source.
Profits** naturally benefit from effective cost control. According to the data, Meta's total spending in the last fiscal year was about $106.2 billion, in line with its previous spending guidance. Among them, after several vigorous layoffs, Meta has reduced a total of about 20,000 employees, successfully reducing spending on manpower and welfare. However, as investment in innovative businesses such as AI gradually increased in the second half of the year, R&D expenses also returned to growth.
In addition to throttling, open source has also had an effect. In Meta's business landscape, advertising is undoubtedly the most core part, and it has not changed for so many years. According to the financial report, the revenue of Meta's advertising business in the past four quarters was 28.1 billion, 31.5 billion, 33.6 billion and 38.7 billion US dollars, respectively, a year-on-year increase5% and 238%, also in the second half of the year, the growth rate is rising.
In the second half of last year, the recovery of the U.S. Internet advertising market was visible to the naked eye, and the performance of Google, Amazon and other major manufacturers also proved this. According to a report by GroupM, the size of the U.S. internet advertising market will grow by about 5% year-on-year in 20231% and will continue to grow at a similar rate this year.
Morgan Stanley's statistics show that in the past year, the volume and price of Meta's advertising business have soared, and the growth of users has brought higher impressions, which has also given the platform the confidence to raise the charging standard. Among them, the second and third quarters of advertising impressions increased by 34% and 31% year-on-year, respectively, which is the best performance since the second quarter of 2021.
For 2024, management has developed a moderately aggressive spending plan, with total annual expenditures expected to be $94 billion to $99 billion, and capital expenditures to be $30 billion to $37 billion. Prior to that, capital expenditures were widely expected to be within $32 billion.
With more money, Meta also announced an increase of $50 billion** in buybacks, as well as the first dividend in history. Meta's decision to pay a quarterly dividend of 50 cents per share shocked Wall Street. This means that Meta will be on par with its peers Apple, Microsoft and Oracle.
In response, Mark Mahaney, analyst at Evercore ISI, said: "This was one of the most impressive quarters [in terms of both nature and expectations]. A number of investment banks also said that the large dividend payout shows that the board of directors is satisfied with the company's operating conditions, and Meta must have exceeded expectations in the past fiscal year to achieve performance indicators. Releasing this positive signal to the outside world is also conducive to stimulating capital inflows and stabilizing shareholder confidence. For example, investment banks such as Goldman Sachs, Barclays, and Citigroup updated their research reports as soon as possible and raised Meta's target price to more than $500.
Run into the AI at full speed
The excitement of Wall Street is not limited to this - Meta, which previously lost money by betting on the metaverse, is being reborn on the AI track. In July last year, Meta announced that it had deepened its cooperation with Microsoft to officially launch a new generation of open-source large language model Llama 2, and make the model free and open for commercial and research use. In a statement, Zuckerberg said: "We had a great quarter, and our community and business continue to grow. We've made a lot of progress in advancing our vision for AI and the metaverse. ”
Chen Jia, an independent international strategy researcher, told a reporter from Beijing Business Daily that after the last strategic failure of the transformation of the general direction of the metaverse META, Zuckerberg was forced to realize the second strategic transformation of the enterprise through the open source of the new generation of large model MLLM.
According to reports, Llama, Meta's generative AI large language model, is further using its own chips to power it. Zuckerberg also said that the two existing AI research efforts (FAIR and GenAI) will be pushed together to "support our long-term goal of building general intelligence, responsibly open source, and making it available and useful to everyone in our daily lives."
On the other hand, Guo Tao, an angel investor and senior artificial intelligence expert, said that Meta's LLAMA open source project will focus on a large number of small and medium-sized enterprises and a large number of users, and Microsoft can expand the business scale of cloud services and infrastructure services such as Windows by deepening cooperation with Meta, and further improve the competitiveness of cloud services; On the other hand, through the deepening cooperation between Microsoft and Meta, it can reduce its over-dependence on OpenAI, integrate the technical advantages of both parties and complement each other, accelerate the iteration and upgrading of new products, improve consumer satisfaction, and achieve rapid growth in performance.
According to Wall Street News, Meta is currently training LLAMA 3, and by the end of this year, Meta will have about 350,000 Nvidia H100, and if other GPUs are included, there will be about 600,000 H100 equivalent computing power.
With Meta's skyrocketing, Zuckerberg's wealth also surged by $27 billion last Friday, and his current net worth reached $169.5 billion, setting a record for his own personal wealth, surpassing Bill Gates and rising to fourth place on the Bloomberg Billionaires Index. In addition, Zuckerberg will receive about $700 million a year in dividends from Meta as a result of its first dividend to investors.
As Zuckerberg once said in an interview with Forbes magazine, "It's not your enemies who decide your fate, it's your own actions." In the past year, Meta has practiced this principle with practical actions - Internet giants want to change their lives against the sky, and they can only rely on themselves after all.
Beijing Business Daily reporter Fang Binnan Zhao Tianshu.