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.