The magnificent Meta Platforms shares will double in value

Meta platforms NASDAQ: META it still has a long way to go to double its valuation from the market cap released before the fourth quarter, but it is on track to reach a $2 trillion valuation. The company’s commitment to efficiency, use of artificial intelligence, and its growing and loyal fan base continue to pay off for investors, and the story only gets better. The fourth quarter results were good enough on their own, the guidance is the icing on the cake, but the decision to pay dividends sent this stock up 15% in pre-market trading and likely up in the short, short, medium and long term.

What does the dividend do for Meta? Many. The dividend sends a signal of stability and maturity to the market and comes from a vigorously growing technology company. Other tech companies have used dividends to leverage their $2 trillion-plus valuation Apple NASDAQ:AAPL AND Microsoft NASDAQ:MSFT, valued in the order of 3 trillion dollars. Microsoft, at least, is on track to reach $4 trillion. Other candidates include Alphabet (NASDAQ), Amazon NASDAQ:AMZNAND NVIDIA NASDAQ:NVDA, but Meta has collected them all. Its payout is in line with Apple and Microsoft and is even safer with stronger growth prospects.

Meta’s board approved its first-ever dividend of $0.50 per share. This annualizes to $2.00 or about 0.4% compared to the 0.5% paid by Apple and 0.75% by Microsoft. We have to assume that Meta will pay a regular quarterly dividend and make annual increases, but it is unlikely to do anything different. Microsoft has been growing for over twenty years and Apple has been growing for more than ten.

The fact that it pays dividends opens up potential ownership to all funds and investment plans that can only invest in dividend-paying stocks. Annual increases attract buy-and-hold investors, and the upside outlook is solid. The $2.00 annualized payout is less than 15% of earnings, in line with Apple and better than Microsoft. The balance sheet is solid and earnings growth is expected.

Meta Platforms has a Cinderella neighborhood

Meta Platforms had its best quarter ever regarding the market, its expectations and outlook for future results. The company posted net revenues of $40.11 billion, a gain of 24.7% year-over-year, beating consensus by 240 basis points. The strength was aided by a tailwind FX, which explains the strength. Nonetheless, forecast growth of 22% is good and is compounded by widening margin, capital returns and guidance.

Internal parameters are also favourable. The company grew daily and monthly active users across the board, with strength in MAUs outside of Facebook. User growth is low in the mid-to-high single digits, but exacerbated by ad penetration. Ad impressions are up 22% and revenue per ad is up 2%, creating one of two tailwinds leveraging bottom line results. The other is efficiency. The company reduced costs by 8% with a 22% decrease in headcount to more than double operating margin and increased net profit by 200%. Lean operations are expected to continue this year.

The guide speaks for itself. The company expects revenue of between $34.5 billion and $37 billion in the first quarter. This is a growth of 20% compared to last year, demonstrating that growth is accelerating in 2023.

The buybacks help push Meta shares to new highs

As if there wasn’t enough good news already, the Meta report also increased the stock repurchase rate. The company repurchased $20.03 billion worth of common stock in the fourth quarter, has $30 billion remaining under the current authorization, and raised the plan by $50 billion, leaving $80 billion available, approximately 8% of pre-release market capitalization.

The only thing that could hold Meta stock prices back are analysts. Analysts raised the consensus 85% year-over-year, but it lagged new highs at the high end of the target range. Analysts have been slow to release revisions, but will likely raise their targets and consensus; the question is how much and where the new ceiling will be.

Technically speaking, there’s a chance Meta shares will advance by a high triple-digit figure in the next few years, perhaps faster. The market made a significant correction in 2021 and 2022, but recovered its losses well, establishing a trading range that has been broken. The stock reached a critical turning point when it broke new highs in January and could advance a range of magnitude now that the pivot is confirmed. Furthermore, the rally in 2023 is strong and shows a sign of continuation that has yet to manifest itself.

Before you consider Meta Platform, you’ll want to hear it out.

MarketBeat tracks Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and Meta Platforms wasn’t on the list.

While Meta Platforms currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here