Meta’s move shows share buybacks are back — and that could power stocks higher this year

Feb 2, 2024
  • Meta Platforms outlined a $50 billion stock-buyback plan Thursday.
  • That signals to investors that execs feel good about the social media giant’s business prospects.
  • Deutsche Bank expects listed companies to spend $1 trillion buying their own shares in 2024.

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Meta Platforms‘ stellar results Thursday added an exclamation point to Mark Zuckerberg’s “Year of Efficiency” – and served up a reminder of one factor that could drive the market higher in 2024.

As well as issuing its first dividend, the Facebook parent outlined plans to increase its stock-buyback program by $50 billion.

Meta isn’t alone in flexing its muscles by signaling it’ll spend money buying back its own shares this year.

Return of the buyback

Buybacks tumbled 15% to about $800 billion last year, according to data from Goldman Sachs, with listed companies taking a cautious stance on the economy after the Federal Reserve jacked up interest rates in a bid to tame inflation.

But Deutsche Bank strategists expect that figure to rebound to $1 trillion in 2024, powered higher by stronger earnings and better market sentiment.

Homebuilder Lennar, natural gas company ONEOK, defense firm Northrop Grumman, and Wall Street bank Wells Fargo have all announced billion-dollar stock buybacks this year.

On Thursday, Meta joined the party when it announced buybacks worth $50 billion, having already announced a $40 billion investment in its own shares last year. 

Its move sends a clear signal to investors that executives like Zuckerberg feel good about the company’s business prospects – after all, a listed firm wouldn’t want to buy its own shares if it thought their value was likely to fall.

The buybacks come off the back of a brilliant year for the “Magnificent Seven” tech stocks, which racked up triple-digit gains in 2023 thanks to its cost-cutting efforts, as well as general investor excitement about artificial intelligence.

Meta climbed another 17% Friday, putting its market capitalization on course to surge another $170 billion at the opening bell.

“It’s a double whammy of good news for investors – not only are Meta considered the future of the global economy, but they’re also providing dividends and billion-dollar buybacks,” Kathleen Brooks of XTB told Business Insider. “The alchemy of it just makes for the perfect stock.”

That positivity spreading across the S&P 500 could help the benchmark index, up 3% so far in 2024, to eke out further gains.

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