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Meta’s Threads Surpasses 100 Million Users in Just Five Days, Driving Stock Higher

Meta’s Threads Surpasses 100 Million Users in Just Five Days, Driving Stock Higher
Sep 22

Meta’s Threads Surpasses 100 Million Users in Just Five Days, Driving Stock Higher

Meta Platforms, formerly known as Facebook, experienced a significant surge in its stock price as its new social media platform, Threads, attracted over 100 million users within a mere five days of its launch. The impressive growth rate of Threads, often likened to Twitter, has caught the attention of investors and industry observers alike.

CEO Mark Zuckerberg shared the exciting news on Monday, stating that the impressive number of sign-ups was primarily driven by organic demand, without the need for extensive promotional efforts. Meta has yet to fully unleash the platform’s promotional potential, hinting at further growth opportunities.

According to data from Quiver Quantitative published on Monday, Threads achieved the 100 million milestone, making it one of the fastest-growing apps of its kind. In comparison, it took OpenAI’s ChatGPT, supported in part by Microsoft, nearly two months to reach the same milestone.

The market responded positively to this news, with Meta’s stock rising by 1% in early Monday trading, while the Nasdaq experienced a minor decline of 0.21%. Meta shares were valued at $293.24 each, reflecting the enthusiasm surrounding Threads’ success.

Despite the rapid user growth and the attention it has garnered, Threads is not expected to have an immediate impact on Meta’s revenue. However, KeyBanc Capital Markets analyst Justine Patterson estimates that Threads, which already accounts for approximately one-third of Twitter’s active user base, could contribute between $800 million and $6.7 billion to Meta’s overall revenue in 2024.

Regulatory challenges have arisen for Meta in the form of the European Digital Markets Act rules, preventing Threads’ launch in the European Union. Given Meta’s recent legal setbacks involving the handling of user data for targeted advertising, the company is unlikely to challenge this restriction.

CFRA senior equity analyst Angelo Zino believes that despite the exclusion from the EU initially, the growth of Threads is expected to be exponential in the coming months. Zino maintains a positive outlook on Meta’s stock, holding a ‘buy’ rating with a $350 price target.

The launch of Threads followed controversial changes made to the Twitter platform, including limitations on the number of tweets users can see daily. These changes were implemented by Elon Musk, Twitter’s controlling owner, in an effort to combat data scraping and system manipulation on the microblogging website.

New Twitter CEO Linda Yaccarino, who joined the company from NBCUniversal, expressed the need for significant changes to strengthen the platform. Meta, on the other hand, has capitalized on its vast user base of 3 billion across platforms like Facebook, Instagram, and WhatsApp to fuel the growth of Threads.

In conclusion, Meta’s Threads has made an impressive debut, attracting over 100 million users within a short span of five days. The success of Threads, coupled with Meta’s existing user base, holds promise for the social media giant, although immediate revenue impact is not expected. Investors and analysts remain optimistic about the platform’s growth potential and its ability to diversify Meta’s revenue streams.

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