Mark Zuckerberg is going to Earn $700 million from Meta Dividends.

KEY POINTS

• Meta shares increased by almost 17% in premarket trading in the US after the firm reported a tripling of profits in the fourth quarter and declared its first cash dividend.
• Revenue increased by 25% in the quarter from $32.2 billion a year ago, the quickest pace of growth since mid-2021 due to a comeback in the internet ad market.
• Investors praised the companies plan to offer a dividend, an uncommon move for a fast-growing tech company.

Mark Zuckerberg, the CEO of Meta, the parent company of Facebook, Instagram, and WhatsApp, is projected to collect $700 million (£549 million) in annual dividends.

On Thursday, Meta announced that it would pay its first quarterly dividend to investors since Facebook went public in 2012, after exceeding Wall Street estimates with $40 billion in revenue in the fourth quarter of last year.

The business announced a tripling of quarterly profits to $14 billion as advertising sales recovered, despite cutting 22% of its workforce, bringing the total number to around 19,000, and launching a $50 billion share repurchase.

Zuckerberg also announced that the company, which turns 20 this month, will pay its first dividend as a public corporation at 50 cents per share. Meta stated that the $1.25 billion payment to investors would be the first of many regular payouts.

Zuckerberg owns over 350 million shares, which means that assuming Meta pays out dividends at the same rate each quarter, he will get almost $700 million over the course of the first year of the policy.

The 39-year-old received $27 million in total compensation in 2022, the most recent year for which comprehensive remuneration details were available.

Investors have welcomed the decision to start paying dividends. Meta’s stock rose more than 17% in pre-market trading in the United States on Friday, although several experts have questioned why the company made the move.

“The move is surprising given it has flagged a need to invest heavily in AI-related infrastructure, and its metaverse project is gobbling up cash on a quarterly basis with no sign of it making a profit for years to come,” said Dan Coatsworth, an investment analyst at AJ Bell. “Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously.”

However, Coatsworth emphasized that it is a “token gesture” considering that the dividend is $2 per share, resulting in a 0.4% yield for an investor based on Meta’s $461 share price.

“That’s not going to win over a whole new group of investors looking for income opportunities,” he said. “In fact, it’s the type of yield to which most investors pay little attention.”

Coatsworth noted that, while the corporation has stated that share buybacks would continue to be the primary mechanism for returning capital to shareholders, the start of dividend payments is a way for the tech industry to demonstrate that it has reached mainstream maturity, similar to the oil, gas, banking, and pharmaceutical sectors.

“Companies start paying dividends when they are more grown up, perhaps when they’ve commercialised an idea and are seeing a steady increase in sales and profits,” he said. “Meta already has a well-established social media network business with a large income stream from advertising, so one could argue the dividend could have been initiated a long time ago.”

The company was chastised during a US Senate judiciary committee hearing on Wednesday, which was held to question Zuckerberg and other internet executives on the impact of their services on underage users. The CEO expressed his sympathy to the parents of children who perished as a result of online exploitation.

Throughout the session, Congress members praised legislation that would deprive the company and its other platforms of legal immunity for information uploaded on their networks. This comes months after the attorneys general of 41 states filed a huge lawsuit against Meta for its influence on teenage users.

The New Mexico Attorney General has also filed a lawsuit against the corporation for allegedly failing to prevent child sexual exploitation and trafficking.

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