Meta's first-ever dividend, the pioneering parent company of Facebook, Instagram, and WhatsApp, allays investor fears that the metaverse and AI plans were going to be "an abyss" for money, says the CEO of one of the world's largest independent financial advisory and asset management organisations.
The bullish analysis from deVere Group's Nigel Green comes as Meta said it will pay investors a dividend of 50 cents a share on March 26, as cash swelled to $65.4 billion at the end of 2023 from $40.7 billion from the previous year earlier. The company also announced a $50 billion share buyback.
He says: "This move is a testament to Meta's commitment to shareholder value and marks a significant shift in perception, not only for the company itself but also for the broader metaverse and AI sectors.
"The initiation of dividend payouts and the massive share buyback program serves as a clear indication that Meta is confident in the profitability of its metaverse and AI ventures.
"This confidence will have a ripple effect on investor sentiment, transforming scepticism into optimism.
"Shareholders, who were once concerned about the potential financial pitfalls of these ventures, which many had assumed would be an abyss for money, now see tangible returns on their investments, creating a more positive outlook for Meta and the sectors it operates in."
Meta's financial initiatives extend beyond its own corporate strategy to become a beacon of assurance for the wider metaverse sector.
"As a trailblazer in the development of virtual reality experiences and digital interactions, Meta's commitment to delivering returns on its metaverse investments instils confidence in the industry's viability.
"The dividend payouts and share buyback program send a strong signal to investors that the metaverse is not just a speculative concept but a burgeoning market with substantial growth potential," notes Nigel Green.
Similarly, the move resonates positively in the AI sector, where Meta has been channelling significant resources to develop innovative technologies.
The deVere CEO continues: "The company's commitment to delivering shareholder value while advancing AI capabilities sets a positive inflexion point for the broader AI industry. Investors, who may have been cautious about the potential financial burdens associated with AI research and development, now see Meta's strategic financial initiatives as a validation of the sector's potential for profitability."
He has previously opined that almost all investors should have some artificial intelligence (AI) exposure in their investment mix, saying that AI is going to reshape whole industries and fuel innovation – and this makes it crucial for investors to pay attention. "Getting in early allows investors to establish a competitive advantage over latecomers. They can secure favourable entry points and lower purchase prices, maximising their potential profits.
"This tech has the potential to disrupt existing industries or create entirely new ones. Early investors are likely to benefit from the exponential growth that often accompanies the adoption of such technologies. As these innovations gain traction, their valuations could skyrocket, resulting in significant returns on investment," he notes.
While AI is The Big Story currently, investors should, as always, remain diversified across asset classes, sectors and regions in order to maximise returns per unit of risk (volatility) incurred.
Nigel Green concludes: "Meta's initiation of dividend payouts and a substantial share buyback program has ushered in a new era of confidence for investors, not only in Meta itself but also for the wider metaverse and AI sectors."