Threads Gains Momentum with 100 Million Users in Five Days

Meta Platforms, the parent company of Facebook, made waves last week with the launch of Threads, a text-based social media app that directly challenges Twitter. In just its first five days, Threads amassed an impressive 100 million users, according to a post by Meta CEO Mark Zuckerberg. Notably, Threads has yet to be launched in the European Union. This rapid success has even surpassed that of ChatGPT, an OpenAI chatbot that sparked the recent artificial intelligence boom, in terms of user acquisition speed. While Meta seems to be making progress in building engagement, investors and analysts are eager to understand how Threads will generate revenue and ensure long-term success. Meta has not yet shared any advertising strategy, and Instagram head Adam Mosseri has stated that the focus is currently on enhancing the app’s features and offerings. This move by Meta comes as many advertisers have pulled back from Twitter due to concerns over increasing hate speech.

The Importance of Monetization for Threads

It is worth noting that Threads is still in its early stages, and its long-term impact depends on how it can effectively monetize its user base. Currently, Meta has not disclosed any specific plans for generating advertising revenue from Threads, similar to the successful strategies employed by Facebook and Instagram. Paul Meeks, a portfolio manager at Independent Solutions Wealth Management, cautions that it is too soon to predict Threads’ financial success. He emphasizes the importance of credibility and believes it will take time for the app to become a significant financial boost for Meta. However, Mark Mahaney from Evercore ISI sees Threads as a low-risk venture for Meta, offering potential upside for revenues and profits. He predicts that Threads could attract 200 million daily active users and generate $8 billion in annual revenue, resulting in additional earnings per share for Meta.

The Focus on User Engagement and Data Collection

While the path to financial success remains uncertain, investors are primarily interested in the level of user engagement that Threads can achieve. Strong user numbers may eventually attract advertisers to the platform. Gene Munster, from Deepwater Asset Management, views Threads as a valuable source of data for Meta’s ad attribution model. This data can provide valuable insights to entice advertisers away from competitors over time. Despite the potential benefits, Meeks warns that an advertising boom for Threads could divert resources and potentially harm Meta’s successful platforms like Instagram and Facebook.

The Impact on Twitter and Competitors

Threads has the potential to disrupt the social media industry and lure advertisers away from competitors. However, the biggest risk is seen for Twitter, particularly considering its recent struggles. Twitter’s traffic appears to be declining as Threads gains popularity, according to Cloudflare CEO Matthew Prince. Similarweb data indicates a 5% decrease in Twitter traffic during the first two days of Threads’ availability compared to the same period in 2022. Additionally, Meta’s existing database of 2 billion customers provides a significant advantage for Threads. The app’s user-friendly interface and seamless integration with Instagram followers make it challenging for competitors like Snap and Pinterest to replicate. Despite these challenges, industry experts like Roger McNamee, co-founder of Elevation Partners, believe that Meta has the potential to outperform Twitter. McNamee considers Twitter’s past success to be a “fluke” and believes that Meta’s leadership and expertise can drive better outcomes. However, the size of the market and its impact on Meta’s financials remain uncertain.