It is still early days, but Meta Platforms Inc.’s latest app, Threads, could generate some serious cash for the social media giant in the next couple of years, according to Evercore ISI.
Threads will reach close to 200 million daily active users and generate about $8 billion in annual revenue over next two years, Evercore ISI analysts led by Mark Mahaney estimate.
It’s off to a good start: Instagram’s new app, designed as a direct rival to Elon Musk’s Twitter, signed up 100 million users in the days since Meta launched the service last Wednesday.
It’s a fraction of the $156 billion average annual revenue analysts expect Meta to generate in fiscal 2025, according to data compiled by Bloomberg, but ahead of the $5.1 billion in sales and revenue Twitter earned in its last full year as a public company. Last year, Meta brought in about $117 billion in revenue and has more than 3 billion active users across its social media apps.
Threads’ biggest rival Twitter, which has been beset by controversy since Musk acquired it last year, had 237.8 million users as of July 2022.
It will be interesting to see if Threads can maintain a reasonably robust growth rate and keep users engaged without meaningfully cannibalizing engagement on Meta’s other platforms, Facebook and Instagram, Mahaney, who has an outperform rating on the stock, wrote in a research note.
His peer from KeyBanc Capital Markets Inc., Justin Patterson, also sees the app bringing in several billions of dollars in ad revenue for the company but it “will be an immaterial contributor near term as Meta likely focuses on adoption over monetization.”
Mark Zuckerberg, who has been very active on his new platform, seems to share that view.
Late last week, he posted on Threads saying “our approach will be the same as all our other products: make the product work well first, then see if we can get it on a clear path to 1 billion people, and only then think about monetization at that point.”
Meta’s stock has more than doubled this year and jumped as much as 2.6% to touch a 17-month high in Monday trading. Meta, along with other tech giants, has been one of the driving forces behind gains across the S&P 500 and Nasdaq 100 benchmarks in 2023.
(Updates Threads sign ups in third paragraph and shares in final paragraph.)