New York, 06, July 2023: Meta Platforms (META) - Get Free Report shares jumped higher Thursday after the social media group said it added more than 10 million new users in less than 24 hours amid the launch of its new micro-blogging app 'Threads'.
Threads, a text-based messaging app that has been dubbed a "Twitter Killer" by some analysts, added the 10 million new users as changes on the Twitter platform, introduced earlier this week by Elon Musk, continue to disrupt the site's day-to-day activities.
The changes are part of an effort led by Musk to counter what he called "extreme levels of data scraping & system manipulation" on the microblogging website.
Meta, meanwhile, is extending its run of "look-alike" programs, including Reels, a variation of TikTok, and Stories, a take-off from Snap Inc.'s (SNAP) - Get Free Report disappearing messages, to build on its 3 billion-plus user base.
“There should be a public conversations app with 1 billion-plus people on it,” Meta CEO Mark Zuckerberg said in his first series of posts on the platform. “Twitter has had the opportunity to do this but hasn’t nailed it. Hopefully we will.”
Meta shares were marked 1.63% higher in pre-market trading, indicating an opening bell price of $299.18 each.
KeyBanc Capital Markets analyst Justin Patterson, however, notes that while Threads "appears to address many of Twitter's challenges" and could "represent several billions of dollars in ad revenue in a more bullish scenario" the near-term impact is likely to be negligible as Meta focuses on "adoption over monetization".
"If Meta can be at least one-third the size of Twitter's U.S. audience or reach 50% of Facebook's UCAN audience, we see an $800M-$6.7B (1-5%) lift to our 2024E revenue, with international monetization likely comparable to the U.S." said Peterson, who lifted his price target on Meta to $335 per share while keeping his 'overweight' rating in place.
"We expect Threads will receive a disproportionate amount of attention over the coming weeks (but) the real story, in our view, is that the core ad platform remains very healthy," he added.