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Good morning readers. Did you know Subway is now offering footlong cookies? We know…yum. The company’s fresh footlong cookies have stirred up such a craze that they vanished from the menu just weeks after their debut due to a massive cookie shortage. The unexpected success of Subway's new Sidekick lineup, featuring items like Cinnabon churros and Auntie Anne's soft pretzels, led to over 3.5 million snacks sold since January 22. To cope with soaring demand, Subway temporarily axed cookies from its app and third-party delivery platforms.

All this to say, go and get yourself a footlong cookie. You deserve it.

Let’s jump into today’s storylines.

In today’s digest:

• Meta announces its first ever dividend

• Headline Hustle: Medicare drug price negotiations begin, Tesla removes all references to DEI in 10-K filing, Lewis Hamilton is making a move to Ferrari

• What the global minimum tax means for corporations

• Pulse Points: What’s Trending

TECH

Meta delivers impressive Q4 earnings, announces historic dividend

Meta has left industry watchers and investors pleasantly surprised with its fourth-quarter earnings report, announcing not only a beat on earnings and revenue but also its first-ever dividend payment. The news sent Meta shares soaring 14% in extended trading, reinforcing the tech giant's robust financial health and market confidence.

A look at the numbers

Some of the key takeaways from Meta’s earnings report:

• Earnings per Share (EPS): Meta reported an EPS of $5.33, surpassing the anticipated $4.96 as predicted by analysts.

• Revenue: The company's revenue for the quarter reached $40.1 billion, beating expectations that stood at $39.18 billion.

• Active Users: Meta experienced strong user growth, with daily active users (DAUs) totaling 2.11 billion, exceeding the expected 2.08 billion. Additionally, monthly active users (MAUs) amounted to 3.07 billion, slightly above the anticipated 3.06 billion.

• Average Revenue per User (ARPU): The company reported an ARPU of $13.12, surpassing the expected $12.81, indicating strong monetization of its user base.

The standout performance for Meta was highlighted by a remarkable 25% surge in revenue compared to the previous year, marking the fastest growth rate since mid-2021. Notably, the company's strategic cost-cutting measures played a pivotal role in doubling its operating margin to an impressive 41%. Meta also reported that net income had more than tripled, reaching a remarkable $14 billion, equivalent to $5.33 per share, representing a considerable upswing from the previous year's $4.65 billion ($1.76 per share).

But not all that glitters is gold. While Meta's Reality Labs unit delivered a commendable performance, boasting sales exceeding the billion-dollar mark, its virtual reality segment reported a notable loss of $4.65 billion during the quarter.

Keep the good times rolling. The impressive surge in revenue can be attributed to a diverse range of companies operating across sectors such as e-commerce, entertainment, and gaming. Notably, Meta's financial resurgence was significantly bolstered by Chinese retailers, with revenue from China-based advertisers contributing 10% to annual sales and accounting for a substantial 5 percentage points of growth.

It’s important to note: This impressive earnings report follows a Senate Judiciary Committee hearing, during which Mark Zuckerberg faced hard questioning relating to child exploitation issues on the company's platforms.

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Headline Hustle

💊 Medicare drug price negotiations have started with the U.S. government. The much-anticipated battle between the U.S. government and pharmaceutical giants over drug prices has started. Under a new U.S. law, the government is making its opening offers to Johnson & Johnson, Merck, and other major players for 10 pivotal drugs spanning cancer, diabetes, and more. These negotiations could reshape the healthcare landscape, potentially delivering billions in Medicare savings and influencing patients' out-of-pocket expenses.

🚫 Tesla removes mention of all DEI references from latest 10-K filing. Elon Musk's latest social media target? Diversity, Equity, and Inclusion (DEI). Tesla has removed all references to minority workers and outreach to minority communities from its recent 10-K filing with the SEC. This shift comes on the heels of Musk's outspoken criticisms of DEI policies and racial discrimination lawsuits against Tesla. Previously, Tesla had celebrated its workplace diversity, but now, it appears to distance itself from such initiatives. Musk's vocal stance against DEI is at odds with the corporate world's previous commitments to these principles. While Musk's tweets may have ignited controversy, DEI remains a hot topic in corporate America.

🏎️ The GOAT of Formula One is leaving Mercedes for Ferrari. Seven-time Formula 1 world champion Lewis Hamilton is set to trade in his Mercedes for a fiery red Ferrari at the end of the 2024 season. Hamilton, who activated a contract release option, bids farewell to an 11-year partnership with Mercedes. Team Principal and CEO Toto Wolff acknowledged their historic success, but also the inevitability of this day. As Hamilton gears up for his final Silver Arrow season, eyes are on the thrilling spectacle that awaits when he joins the Prancing Horse in 2025.

GLOBAL

Corporations dance around the 15% minimum tax

The introduction of the global minimum tax rate of 15% is ushering in significant changes in corporate tax payments for multinational giants. Major companies are bracing for higher tax liabilities in 2024, as the international tax deal from 2021, adopted by multiple countries, comes into full effect.

Sticking to the sidelines

The agreement mandates that U.S. corporations, which previously benefited from single-digit tax rates in certain foreign jurisdictions, must now ensure a minimum tax rate of 15% in each of those regions. Despite active involvement from Treasury officials in shaping this international accord and President Biden's endorsement of its implementation, the U.S. Congress has yet to align domestic tax laws with the global minimum tax deal.

As a result, the United States is not currently collecting any revenue directly from domestic or foreign companies as part of this agreement.

Who’s backing the new tax? Supported by approximately 140 jurisdictions, the accord seeks to curb cross-border tax competition and ensure greater contributions from companies to government revenues. Currently, 36 countries have either implemented the agreement or are in the process of adopting new tax rules.

• Companies with global revenues exceeding €750 million (approximately $810 million) may now face new taxes on their profits.

• According to the Organization for Economic Cooperation and Development (OECD), this could lead to businesses paying an additional $155 billion to $192 billion in taxes annually, representing a 6.5% to 8.1% surge from their current tax payments.

Despite the absence of changes in U.S. tax regulations, American corporations face increased tax burdens due to the global minimum tax and the depletion of their foreign tax credits, leading to potential dual taxation on the same income.

Big picture: While the U.S. may eventually benefit from shifting corporate operations as global tax rates harmonize, the jury is still out on whether this will become a reality. The world is now waiting to see how these companies will adapt their strategies over the long term, especially concerning investment and location decisions.

SNIPPETS

Pulse Points

• Amazon introduced Rufus, a new artificial intelligence assistant designed to help shoppers with product searches and shopping, on Thursday.

• The health-care division of Publicis, a French advertising giant, has agreed to pay $350 million to settle allegations that its marketing for drugmakers contributed to the opioid crisis in the U.S., as announced by state attorneys general.

• European Union leaders have approved a $54 billion budget-aid package for Ukraine, securing funding for the next four years despite initial opposition from Hungarian Prime Minister Viktor Orban.

• China executed a couple for killing two toddlers by throwing them from a high-rise window, sparking nationwide outrage.

• NBC has ordered a pilot for "Suits: LA," a spinoff from the original series by Aaron Korsh, marking a new chapter for the show in a Los Angeles law office.

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