Last Wednesday, July 5, Facebook and Instagram owner Meta (META) launched its "Twitter-killer" microblogging app, Threads. It quickly reached 70M signups before the weekend, hence becoming the fastest-growing app in history. It was launched in 100 countries and hit 30M users in just 24 hours, allowing Instagram account holders to simply transfer to Threads by using their existing credentials.
Meta CEO Mark Zuckerberg said the number of signups was way beyond expectations. On the opposite side, Elon Musk's Twitter has threatened to sue the "copycat" app over an alleged violation of its "intellectual property rights". So what is the Threads app exactly, how might it affect Twitter and how is Meta’s stock performing recently?
Threads' Key Feature: "Kindness"
The new Threads app is freely available, but new signups require an Instagram account. In an apparent reference to Twitter, Zuckerberg made a thread emphasizing that he wanted to make "kindness" the central feature of the app's appeal. Stanford's Internet Observatory said that if Threads manages to hoard a positive tone, it would be a big draw for advertisers. This was the very point top Meta executive Adam Mosseri, who oversees both Instagram and Threads, underlined. He said the prioritization of news and active encouragement of political discourse was not worth the business and would probably generate downsides for the platform.
Meta's Strategy to Capture Twitter Users
Mosseri also acknowledged that difficulties at Twitter were the impetus for launching Threads. However, the comments also come following several challenges Meta faced from governments. Analysts say that Threads could pose a serious threat to Twitter, which has encountered adverse reactions from people since its takeover by Tesla's (TSLA) Elon Musk.
Recently, users have been angry at Twitter for vulnerabilities, such as limits on how much content users can view. Threads is just the latest in a series of apps intended to unseat Twitter's role in real-time public discourse.
Twitter’s Alternative Faces Its Own Challenges
Many Twitter users have been vocal about wanting an alternative since the app was taken over by Musk last October. There have been frequent technical issues and policy changes that have led users to leave the platform. Meta's Threads could have the greatest chance of beating Twitter as it aims to flip over its 2 billion global active Instagram user base and bolster the new app. But Threads comes with its own hurdles. For example, it's still unavailable in the European Union due to the complexity of compliance with regulations and laws that will come into effect next year.
Threads Captures Congress' Attention
Twitter is known for being heavily used by journalists, academics and politicians, and often sees breaking news. On the other hand, Threads seems to be looking at a much broader audience, targeting to tie in with Instagram as a complement for different use cases as a visual-based platform. Meta de-emphasizes political content on its platforms, and this could carry over to its new Threads app, which could make it different from Twitter.
Analysts suggest that news enthusiasts were unlikely to defect, and it would be a matter of time to see how things shake out once the novelty of Threads wears off. However, over a quarter of US Congress members have created Threads accounts. Advertisers might be more eager to welcome an alternative to Twitter under the Meta umbrella they are already comfortable working with, as it could be perceived as more brand safe. (Source:CNBC)
Short and Longer-Term Impact of Threads on META
Immediately following the launch of its new micro-blogging app, Meta shares rose 3% on Wednesday, adding to gains in the premarket. But analysts still aren't convinced that it will have much of an impact on the company. In fact, they estimate that adding Threads could improve Meta's top and bottom lines by 1-3% annually. However, other analysts believe that even though the app might represent several billion dollars in revenue, the impact will be minimal in the near term as the technology stock focuses on adoption over monetization.
Meta launched its microblogging app, Threads, to capture users who have fled Twitter in the unpredictable environment created by its new owner, Elon Musk. The "Twitter-killer", a direct competitor, racked up 70M new users in less than two days, but analysts are skeptical that it will lead to a substantial increase in Meta's income in the near term. Investors may want to keep a close eye on whether the initial success of the launch of Threads can replicate in the long-term by following updates of the online battle and how Threads plans to improve its features and functionality to counter initial disappointment.