🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Meta shares pop after Threads launch; analysts see little near-term impact for stock

Published 07/06/2023, 05:42 AM
© Reuters Meta shares pop after Threads launch; Analysts see little near-term impact for stock
META
-

Meta Platforms (NASDAQ:META) launched Threads, a direct competitor to Twitter, on Wednesday. The new service attracted millions of users in a matter of hours. META CEO Mark Zuckerberg said the app attracted 10 million sign-ups in seven hours.

Celebrities like Kim Kardashian, Jennifer Lopez, and Democratic U.S. Representative Alexandria Ocasio-Cortez, were all quick to join the new platform.

"Let's do this. Welcome to Threads," Zuckerberg wrote in his first post on the app.

The social media giant hopes to use its huge user base and ad experience to monetize a new platform at a time when Twitter undergoes a transformation. Similar to Elon Musk’s company, Threads allow users to post short text posts, re-post, and reply.

“Our vision with Threads is to take what Instagram does best and expand that to text, creating a positive and creative space to express your ideas. Just like on Instagram, with Threads you can follow and connect with friends and creators who share your interests – including the people you follow on Instagram and beyond,” Meta said in a blog post.

Threads is currently available in over 100 countries.

Meta shares closed nearly 3% higher on Wednesday before adding a further 1.7% in pre-open Thursday trading.

Despite a positive market reaction, Wells Fargo analysts expect little near-term impact from the launch. At maturity, Wells Fargo analysts estimate potential annualized impact at 1-3% of revenue and EPS.

“[We] see Threads as [opportunity] to drive an additional use case for Meta and believe initial monetization will be limited to the US,” Gawrelski wrote in a note.

KeyBanc analysts hiked the price target to $335 per share, up from the prior $280. They weighed in positively on the Threads launch as the app seems to “address many of Twitter’s challenges.”

“While this could represent several billions of dollars in ad revenue in a more bullish scenario (assumes meaningful U.S. and international adoption), we believe this will be an immaterial contributor near term as Meta likely focuses on adoption over monetization,” analysts wrote.

The hiked price target reflects the ramp in Meta’s core ad products.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.