Meta's Stock Soars $200B in a Day on US Market

U.S. tech giant Meta closed at $474.99 on Friday, up $80.21, a 20.32% increase. The stock price hit a historical high, becoming the leader of global metaverse companies. The market value surged to $1.2 trillion.

In just one day, the market value increased by about $200 billion, equivalent to 1.5 trillion yuan. As a result, Zuckerberg's net worth also surpassed that of Microsoft's Bill · Gates.

In the fourth quarter and full year of 2023, Meta repurchased $6.32 billion and $20.03 billion of Class A common shares, respectively. After announcing the latest financial report, Meta also announced an additional $50 billion in stock repurchase authorization and began paying a quarterly dividend of $0.50 per share.

U.S. stock buybacks are usually after announcing financial reports, as a reward to investors. This time, Meta launched a $50 billion stock buyback after the stock price hit a historical high.

Nvidia's stock price rose by more than 31% in three trading days at the end of April last year, with the stock price reaching $401.11, and the market value once exceeded $1 trillion. At that time, stock analysts raised Nvidia's stock price to $450. Now Nvidia's latest stock price is $661.60, which shows that stock buybacks and cancellations can indeed increase stock prices.

After announcing the second quarter financial report on September 26 last year, Nvidia's stock price hit a historical high. The Nvidia board approved a $25 billion repurchase plan.

U.S. high-quality technology stocks usually launch stock buybacks and dividend plans after announcing financial reports. Regardless of whether the stock price is high, most will launch a plan to buy back and cancel stocks, showing confidence in the company's future development.

A-share buybacks are usually launched when the stock is extremely low, to protect the plate and buy back stocks, and also set a price cap for buying back stocks. This is tantamount to indirectly telling investors that the ceiling of the company's stock is here, and others will run away in advance when they see it. How can such a buyback improve the stock price?

By buying back stocks, companies can reduce the circulating shares in the market, increase earnings per share, shareholder equity, and stock prices, etc. Because the company uses its own funds to buy back, this is the money of all shareholders.

Most A-share buybacks do not cancel, but reward the company's executives or employees at low prices. Isn't this a harm to investors? Therefore, the stock prices of A-share companies that buy back stocks usually do not perform well. Gree Electric recently bought back stocks for 3 billion yuan, and because Gree has bought back and canceled stocks before, the stock price has been rising continuously after the current stock buyback.This is the difference between stock buybacks in the US and China. US stock buybacks are for rewarding shareholders, while Chinese stock buybacks are for the welfare of company executives and employees. This is the difference between the two types of stock buybacks.

The above is only my personal opinion and should not be taken as investment advice. Any profits or losses from acting on this information are at your own risk.