Meta Platforms spent $20B during the quarter on buybacks - for nothing
Feb. 05, 2022 4:20 PM ET Meta Platforms, Inc. (FB) BDNCE, AAPL, ZEN, GOOG By: Chris Ciaccia, SA News Editor 191 Comments
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In the metaverse, no one can hear you scream.
That shriek shareholders heard this past week was not only caused by the deep dive in Meta Platforms' (NASDAQ: FB) market cap after it reported poor earnings and guidance, but an ear-piercing sound as a result of an elevated buyback that left some bewildered.
While the more than $220 billion decline may go down as the largest drop in value in stock market history, market capitalizations fluctuate. However, the company may have made an even more egregious error that has largely gone unnoticed: spending nearly $20 billion in actual cash on share repurchases during the fourth quarter of last year that provided little, if any value.
During the period between last October and December, the Mark Zuckerberg-led Meta ( FB) spent $19.2 billion buying back company stock, significantly larger than the $10 billion that Morgan Stanley analyst Brian Nowak estimated. That helped bring down the average diluted share count 3% year-over-year.
According to the company's annual report filed with the Securities and Exchange Commission, Meta ( FB) bought back 21.7 million shares in October at an average price of $326.20, and in November, it purchased 21.6 million more shares, at an average price of $335.09. Lastly, in December, it bought back 14.73 million shares at an average of $329.97.
Altogether, Meta spent the final three months of 2021 buying bac 58 million shares of stock at prices that might not be seen again for months, perhaps years.
To put Meta's purchases in a little more context, the company's shares closed at $237.09 on Friday, and are now down 30% since the start of the year. |
