The Meta Platform made headlines last week with the launch of Threads, a text-based social media app that challenged Twitter and pitted the two tech heavyweights against each other. Meta CEO Mark Zuckerberg said in a post Monday that the launch was a success, attracting 100 million users in its first five days, and the platform hasn’t even launched in the US yet. European Union. That success has translated into Topics that go beyond ChatGPT, the OpenAI chatbot that has spawned the latest artificial intelligence boom, with the rate at which it attracts new users. Investors and analysts say Meta currently seems to be making strides in building engagement, but how it actually monets Themes will play an important role in its long-term success. of the platform. Meta hasn’t shared any advertising strategy yet, and Instagram head Adam Mosseri has said in multiple interviews that it’s focused first on building the offer. Its entry comes after many advertisers in recent months have launched or halted campaigns on Twitter amid rising reports of hate speech. Clearly, Threads is only in the early innings of a years-long ball game and with no clear money-making plan, investors think it’s too early to decipher the long-term threat Threads poses. But without a doubt, Twitter faces the most significant headwinds. “Right now it’s a land grab, right now it’s PR,” said Paul Meek, portfolio manager at Independent Solutions Wealth Management. “Definitely a big win for Meta, a big loss for Twitter. Let’s see what happens to Meta financially.” Too Early to Judge Financial Success Despite an amazing start, Wall Street says it’s too early to really determine how profitable Threads can be. So far, Meta has not shared a monetization strategy, including how to generate an ad revenue stream for Themes that can mirror what Facebook and Instagram generate. “It’s all about reliability and I don’t think anyone, not even an active Meta analyst, can say it’s going to boost the financials anytime soon,” Meeks said. Evercore ISI’s Mark Mahaney wrote in a recent note that Topics “pose very little risk” to Meta’s business, offering “a bullish option” for revenue and profit. He sees the app as a clever way to take advantage of Twitter’s “chaotic execution” and tap into a strong, active user base. Short-term financial developments look uncertain, but Mahaney forecasts that Threads can attract 200 million daily active users and generate $8 billion in annual revenue — an increase of 5% — compared to Meta’s estimate for 2025. That would add $1.50 in EPS, he wrote. With a clear monetization strategy possible for years to come, many investors are simply focusing on engagement, a key metric that can ultimately attract advertisers. Strong numbers can herald long-term success. For example, Deepwater Asset Management’s Gene Munster sees Topics as a way for Meta to collect more data to mine for its own ad attribution model and provide additional insights to engage advertisers away from competitors over time. “You may never see ads on Themes, but the data they are collecting is extremely valuable and I think is fundamentally more valuable than what Meta doesn’t need, which is more ad space for sale,” Mark Douglas, founder and CEO of MNTN recently told CNBC’s “The Exchange.” “They’re not constrained in supply, they’re constrained in demand.” Even so, Meeks warns that the promotional interest for Threads could “cannibalize” Meta’s popular Instagram and Facebook platforms, diverting resources away from the money machines that are already machines. In contrast to Twitter Morfe broadly, Topics could shake up the social media industry and in the long run will win over some of the competitors’ favorite advertisers. But its entry poses the biggest risk to Elon Musk’s Twitter, according to Wall Street. The social networking services company, which was acquired by the Tesla CEO for $44 billion last year, has been seen as fumbling. Cloudflare CEO Matthew Prince shared in a screenshot posted to the platform on Sunday that Twitter traffic appears to be “spiking” as Topics pick up speed. Data from web analytics firm Similarweb shows that Twitter traffic dropped 5% in the first two days Threads was available and 11% year-over-year in 2022. Last week, Musk’s longtime attorney, Alex Spiro, wrote a letter to Meta accusing it of “illegal appropriation” of trade secrets. In an industry that is constantly innovating with few patents protected, Meeks sees little way for Musk and others to slow Threads’ rise, especially when it comes to database mining. Meta’s existing customers include 2 billion customers. He added: “The platform is easy to use, allows users to convert followers on Instagram seamlessly, and offers user interface skills that companies like Snap and Pinterest would struggle to achieve.” Copy. To be sure, Elevation Partners co-founder Roger McNamee said Meta and Threads face a long and difficult road. The early Facebook and Google investor told CNBC’s “Squawk on the Street” this week that he views Twitter’s past success as a “blow of luck,” born of being “in the right place.” , In time”. He calls the platform “never been a great product,” one that has struggled with a range of content moderation, not to mention profitability issues. “For Meta to do better than that, I think is completely realistic because I think people are smarter than the people who’ve been running Twitter for years,” he said. “But I don’t know how big that market is and if it’s enough to make a really big difference on Meta’s earnings report, which is a lot bigger than Twitter.”