Stock of The Week: Meta

Meta has launched its first dividend and shares in the company are up, but Morningstar analysts say the social media giant is overvalued

Christopher Johnson 9 February, 2024 | 10:58AM
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Welcome to Stock of The Week. I'm Chris Johnson.

Facebook and Instagram owner Meta (META) is still the social media company with the most users and usage time, and last week the technology giant dropped its fourth quarter earnings report, which led its share price to skyrocket. It also launched a dividend. 

The business reported a total fourth-quarter revenue of $40 billion up 25% from last year.  

The increase was driven by both advertising revenue, reality labs, and strong holiday sales of Quest 2 and Quest 3 VR headsets.

Meta also announced it had returned billions in cash to its shareholders and that it would initiate its first quarterly dividend payment.  

The markets embraced the news, thrusting its shares upwards by 20.3% to a new record high of $474.87. 

Although Morningstar analysts welcomed the dividend announcement and strong earnings results, our analysts believe Meta’s share price is slightly overvalued. They also question whether advertising spending will slow down due to the impact of uncertainty in the Chinese economy, and whether the country’s businesses will have enough resources to spend with Meta. 

As ever, the question of regulatory oversight never goes away either. All this came as Mark Zuckerberg faced angry parents at a Congressional hearing on child safety and online security.

Data correct as of 8 February 2024

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Christopher Johnson  is data journalist at Morningstar

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