Meta Platforms has made waves in the social media world with the recent launch of Threads, a Twitter clone that has garnered an astounding 100 million users within days. While Meta’s Reels, a TikTok-like feature, has seen success, Threads presents an even greater revenue growth opportunity for the company.
Here are three key reasons why investors should be excited about Threads’ potential to surpass Reels in value-add.
Less Cannibalization: Focusing on Twitter Users
One significant challenge faced by Meta with Reels was its impact on user engagement with the monetized Feed and Stories formats on Instagram and Facebook. However, Threads eliminates this concern by not competing directly with the main Instagram and Facebook apps. Instead, it targets a different platform – Twitter.
This strategy prevents cannibalization within Meta’s own apps while aiming to capture user attention away from Twitter. Early evidence suggests a decline in Twitter traffic since Threads’ launch, indicating its potential to add value to Meta’s family of apps.
AI-Driven Growth: Leveraging Meta’s Expertise
Meta has honed its AI-recommendation algorithm since the introduction of Reels, which now sets the stage for accelerated growth on Threads. Leveraging the existing AI technology, Meta can quickly increase engagement on Threads, propelling it from 100 million users to 1 billion.
The algorithm’s ability to connect new users to their existing Instagram networks and surface personalized content creates a seamless onboarding experience, further driving user adoption.
Fast Monetization: A Familiar Format
Meta’s replication of the Twitter app format with Threads positions the company for swift monetization. Advertisers are already well-versed in optimizing this format, and Meta, with its extensive experience from Facebook’s Feed product, knows how to make the most of it. By following its established game plan, Meta plans to focus on scaling monetization once Threads reaches a substantial user base.
This strategy contrasts with the challenges faced by Reels, where advertisers are still exploring the best advertising approaches. With more advertising opportunities per minute spent on the platform, Threads presents a lucrative revenue stream for Meta.
Explosive Revenue Potential: Building on User Base
Threads offers Meta a significant opportunity to challenge Twitter’s dominance. Despite Twitter’s projected $3 billion revenue this year, it pales in comparison to Meta’s staggering $116 billion revenue in 2022.
Should Threads maintain 200 million daily active users (DAUs), it could generate an additional $8 billion in revenue for Meta by 2025, according to analyst Mark Mahaney. Even at a conservative estimate of $1 per quarter per DAU, Threads presents substantial revenue potential. Considering Meta’s average revenue per monthly active user (MAU) on Facebook was $9.62, the monetization potential for Threads appears even more promising.
Unleashing Revenue Growth Potential for Meta
Meta’s Threads has quickly gained momentum, surpassing 100 million users and demonstrating its potential to outshine Reels in terms of revenue growth. With its unique positioning against Twitter, the power of Meta’s AI-driven recommendations, and the familiarity of the app format for advertisers, Threads represents a lucrative opportunity for Meta Platforms. The estimated additional $8 billion in revenue by 2025, paired with Meta’s vast user base and advertiser network, underscores the tremendous upside of Threads.
As the platform continues to evolve and mature, investors should keep a close eye on Meta’s progress, as Threads has the potential to be a game-changer in the social media landscape.
