Meta Platforms Inc.’s efficiency-obsessed investors don’t like to see the company spend money. Unless — and this will shock you — it’s going into their pockets.
The company’s announcement on Thursday that it will pay its first-ever quarterly stock dividend at 50 cents a share — and increase its share buyback plan by $50 billion — set off shareholder fireworks: Up more than 15% after hours, Meta was the best performing of the big tech stocks reporting earnings this week.
These sweeteners helped provide something of a distraction from the unattractive realities of the company’s need to keep up with competitors on artificial intelligence and for Mark Zuckerberg’s passion project of the metaverse.
After a period of heavy layoffs, payroll expenses will begin to increase, the company said, as it shifts to a workforce of more highly paid technical employees in an extremely competitive hiring environment for top AI talent. And as Meta invests in the infrastructure needed to develop and run AI, it warned capital expenditures could be as much as $2 billion more than it had predicted earlier.
Few investors would question Meta’s intentions in investing huge sums into AI, given the immense money-making potential it has for existing apps — not just as tools but as a means to increase use and engagement. Chief Financial Officer Susan Li told investors that AI-powered video recommendations had helped increase daily watch times 25% compared with the period a year earlier.
There’s less confidence, however, that investments in the metaverse will be worth it. In the final quarter of 2023, the Reality Labs segment for the first time surpassed $1 billion in revenue, thanks to new versions of the Quest VR headset and Ray-Ban smart glasses. Great news, right? Alas, operating losses continued to grow ever more ominous: $4.7 billion for the October-December period, compared with $4.3 billion a year ago. Can investors expect things to improve? No. Expect Reality Labs’ costs to “increase meaningfully,” the company said. (Though at least Zuckerberg is no longer alone in backing the technology; Apple’s Vision Pro headset will finally go on sale on Friday.)
