Threads: Twitter’s new threat?

Key takeaways

  • Meta launch new social media platform Threads
  • The ad-free platform receives fastest user signups of any application
  • Twitter boss Elon Musk continues to implement controversial policies

Meta (owner of Facebook) unveiled their new social media platform, Threads, at the beginning of July; a text-based conversation interface that is being promoted as a more “friendly” rival to Twitter. Threads is linked to Instagram, also owned by Meta, allowing users to switch easily between the two applications. With Twitter becoming more volatile and divisive recently, possibly due to Elon Musk’s management style, Threads provides an alternative for many, and arguably the first meaningful threat to Twitter’s dominance.

User uptake

The response to Threads going live has been stratospheric, with user numbers growing at the fastest pace seen for any application. The platform reached 1 million users in an hour, beating ChatGPT’s previous record by five days, and topping Twitter’s by two years. (Admittedly, comparisons with Twitter span a 17-year period where social media use has exploded.)



The business case

On paper, Threads will not bring additional revenue to Meta, at least for now. Threads is currently an ad-free app. However, as a sort of loss leader, it provides a platform for users of social media, who through Threads also get exposure to Instagram and Facebook, possibly reducing their reliance on Twitter. Creating Threads improves the likelihood of stickier traffic for Instagram and Facebook.

Meta’s new launch coincides with a number of unpopular decisions made by Twitter owner, Elon Musk. Musk seems to keep implementing controversial changes within Twitter, the latest being a cap on the number of tweets a user can view on a daily basis, reportedly to limit data scraping and manipulation. Many feel that Musk is undermining what made Twitter so popular and widespread and is preventing it from realising its full potential. As the company was taken private by Musk last year, the markets no longer have their say.

Meta’s share price recovery from last year has been impressive. The stock is up c.160% year to date and has rallied 15.6% in the last month. This shows that not only are the big US tech firms prospering this year (as we covered last week), but Mark Zuckerberg is winning over investors. Threads may not make much direct difference to profit for Meta, and it may not impact Twitter too much in the end, but it goes some way to reinforcing Meta’s proposition, and its position as one of the dominant social media platforms in the world.

Bowmore portfolios

Though we do not hold direct allocations to equities like Meta, portfolios do have underlying exposure and have benefitted from this over the last six months as Meta’s share price has risen. The recent impact Threads has had on rhetoric around Twitter stands as a reminder that ongoing innovation in growth and tech sectors can disrupt the marketplace and established firms, a theme we access through our technology and cybersecurity allocations.

Source: Refinitiv – Market returns as at 13/07/2023

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