- Meta launched Threads, a direct competitor to Twitter, getting 10 million signups in 7 hours.
- Meta shares closed nearly 3% higher after the release of Threads.
- Despite the positive market reaction, analysts predict a limited short-term impact on Meta’s shares following the launch of Threads.
Meta Platforms launched Threads, a direct competitor to Twitter, on Wednesday. The new service attracted millions of users in a matter of hours. Meta CEO Mark Zuckerberg announced that the app got 10 million signups in just seven hours.
Among the first celebrities to join the new platform are Kim Kardashian, Jennifer Lopez and Democratic United States Representative Alexandria Ocasio-Cortez.“Let’s do it. Welcome to Threads,” Zuckerberg wrote in his first post on the app.
Meta hopes to use its vast user base and advertising expertise to monetize a new platform at a time when Twitter is in a transformation phase. Similar to Elon Musk’s company, Threads allows users to post short texts, repost, and reply. “Our vision with Threads is to take the best of Instagram and expand it into text, creating a positive and creative space to express your ideas,” Meta said in a blog post.
Plus, with Threads, you can follow and connect with friends and creators who share your interests, including the people you follow on Instagram and beyond. Threads is currently available in over 100 countries.
Market Reaction and analyst expectations
Meta shares closed nearly 3% higher on Wednesday, adding an additional 1.7% in the pre-market opening on Thursday. However, despite the positive market reaction, Wells Fargo analysts expect limited short-term impact after the launch. At maturity, they estimate a potential annualized impact of 1-3% on revenue and EPS. “We see Threads as an opportunity to drive additional usage for Meta and believe initial monetization will be limited to the United States”,” Gawrelski wrote in a note.
On the other hand, KeyBanc analysts raised the target price to USD 335 per share, from USD 280 previously. They were positive about the release of Threads, as the app seems to “address many of Twitter’s challenges”. “While this could represent several billion dollars in advertising revenue in a more optimistic scenario (assuming significant adoption in the US and internationally), we believe it will be an immaterial contribution in the short term, as Meta will likely focus on the adoption rather than monetization”,” the analysts wrote.
The target price increase reflects the increase in Meta’s core advertising products.
