Meta’s social media platform, Threads, has rapidly gained popularity, now boasting nearly 275 million monthly users as of late October. CEO Mark Zuckerberg highlighted this achievement during a recent earnings call, expressing confidence in the app’s potential. He stated, “We continue to be on track towards this becoming our next major social app.”
The increase is remarkable, showing a 175% growth from a year ago when Threads had just 100 million users shortly after its launch. By July 2023, the user base had already surged to 200 million, and it continues to grow at an impressive rate of over one million new users every day.
Competing with X
Launched in July 2023, Threads was developed as a direct competitor to X, the platform formerly known as Twitter, which was acquired by Elon Musk in October 2022 for $44 billion. Since Musk took over, X has undergone significant changes, including rebranding and new content strategies that have sparked debate among its users.
Despite Threads’ growth, X still leads with about 318 million monthly users. However, this figure represents a 24% drop since Musk’s acquisition, according to Sensor Tower, creating a favorable environment for Threads to attract users from its rival.
Future Revenue Potential
While the impressive user growth is encouraging, Meta remains cautious about Threads’ potential to generate revenue in the immediate future. During the earnings call, Chief Financial Officer Susan Li noted, “We don’t expect Threads to be a meaningful driver of 2025 revenue at this time.” Li emphasized that the current focus is on enhancing the app’s features to engage users effectively.
Advertising is critical for Meta, accounting for 98.3% of the company’s total revenue. Analysts suggest that Threads could become a significant advertising platform, predicting that ads will start appearing on the app next year. Bernstein analysts indicated that although Threads might not contribute substantially to revenue in 2025, its monetization potential could grow as user engagement increases.
Optimism for Threads’ Development
The positive growth trajectory of Threads has sparked optimism among analysts and investors, though challenges lie ahead. Meta’s strategy involves continually improving the app’s functionality and incorporating user feedback. Li stated, “We’re very focused on continuing to build out the sort of functionality of Threads over time.”
Meta’s overall user engagement across its family of apps—Facebook, Instagram, and others—has also seen a 5% year-over-year increase, reaching 3.29 billion daily active users. However, this number fell slightly short of the anticipated 3.31 billion, highlighting the need for continued innovation and enhancement to meet investor expectations.
The Competitive Landscape
As competition heats up between Threads and X, X’s declining user base presents an opportunity for Threads to capture market share. Musk’s changes to X have led to mixed reviews, which, combined with the user drop, may allow Threads to appeal to disaffected X users.
Despite the challenges, X remains a significant player with a user base still larger than Threads. This ongoing rivalry reflects the dynamic nature of the social media market, where shifts in user preference can quickly reshape the landscape.
Market Reaction
Despite the strong performance of Threads, Meta’s stock price fell by 4% after the recent earnings report, signaling some investor concerns about the company’s performance. Bernstein analysts remain optimistic about Threads’ potential, stating that while immediate revenue contributions may be limited, the app’s growth indicates a promising future for monetization.
