Meta Platforms Bounces Back into the Top Ten
Bryan Taylor, Chief Economist and
Michelle Suzanne, Managing Director
Meta Platforms, formerly known as Facebook, had a huge move last week, rising $35.65 from $153.12 to $188.77. The company announced that they were buying back $40 billion in their shares over the next year. This represents about 8% of the shares in the company and will drive the price of Meta up further as the company adds to the demand for the stock.
Mark Zuckerberg promised that he would make Meta a “leaner and more efficient company” and would lay off 13% of its employees. Good news for the shareholders; bad news for the employees.
Figure 1. Meta Platforms Stock Price in 2023
Meta’s fourth-quarter results beat analysts’ revenue estimates. Meta beat expectations on revenues, bringing in $32.17 billion versus the expected $31.65 billion, but adjusted earnings per share fell short at $1.76 versus the expected $2.26. Facebook had 2 billion daily users during the fourth quarter, or about 25% of the global population. But it wasn’t the news about the past that caused the stock price to pop, but anticipation of future use and revenue.
Meta started buying back its shares in 2017 and spent $28 billion buying back its stock in 2022. Meta had announced a $50 billion increase in its share repurchase in October 2021 when Facebook changed its name to Meta Platforms Inc. Meta stock peaked at 373.28 on July 28, 2021 and dipped down to 88.91 on November 3, 2022. The stock has more than doubled in price since then, so Meta made a good investment in buying back its stock during the last year.
Dr. Taylor and I recently wrote an article entitled “The Decline of the Top Ten Stocks in 2022” which observed that Meta had fallen from number 6 in market capitalization at the end of 2021 to number 19 at the end of 2022 as its market cap declined by 66%. But during 2023, the stock has recovered. The 20% increase in the price of the stock yesterday catapulted Meta stock back into the Top Ten according to market capitalization, moving them up from Number 13 to Number 8 in one day. Who says 13 is unlucky?
Figure 2. Meta Platforms Stock Price Since It Changed its Name in October 2021