Therads: Has Zuckerberg just got a one-up over Musk?

Introduction

Has the buzz around the newest social media platform from Meta, Threads, reached you yet? If by any chance it hasn't, expect that not to be the case in a concise amount of time. The app's user count, which was only available on July 5th, 2023, has already amounted to an estimated 112 million registered users, which is only expected to grow. To provide perspective for those who may still need it, Threads shares very common features with Twitter, with one of the biggest ones being text-based interaction, hence why the owner of Twitter, Elon Musk, has already threatened the father company of Threads, Meta, with a potential lawsuit with Musk reportedly citing Zuckerberg's usage of "trade secrets," along with "other intellectual property" as a means of building the rival app. Ultimately, the main focus point of the agenda is how deep the issues run for Twitter and Elon Musk with the inception of Threads. Do they potentially run beyond economic issues? What is the future for both companies going forward? Is there any room for potential cooperation?

Stock Position

As mentioned, Threads has experienced exponential user growth, with the app reaching figures previously unheard of to platforms relative to the short time in which Threads has existed. With such a rapid rise in activity, the overall stock value of Threads' parent company. Meta Platforms Incorporated has seen highly encouraging effects on its stock price, which, as of the production of this article, is valued at 308,87 United States Dollars. Compare this with Twitter's stock price, which has been locked in at 53.70 United States Dollars since the NYSE's (New York Stock Exchange) delisting of the company from its stock listing, and you already get an indication of Zuckerberg and Meta getting the upper hand in the supremacy in the global social networks market. On top of this, considering the already pre-existing pressure on Musk from several financial institutions to make the company profitable after having been lent large sums of money for the acquisition of Twitter last autumn, the success of Threads puts an additional burden on Musk to try and turn around Twitter's fortunes and rival Threads in gaining an advantage in the social networks market.

Ads > Membership Payments?

Another factor contributing to Threads's early success is that the platform does not charge users money from exploring the realms of the platform to its full extent. The app makes its money solely from ad-generation, for which success is directly linked with user-count, as more users equate to more ad-generations, subsequently generating more revenue for the company. Such a scheme is one of the main reasons for the success of Threads both monetarily and on the stock market, as it directly contributes towards the growing revenue stream of the platform while keeping its user count sky-high. While Twitter also uses ad generation to generate revenue for its institution, it has also implemented several unpopular money-making policies, such as charging monthly fees for verification statuses. While the initiative was found creative at first and led to many users acquiring the "blue ticks," the hype around this innovation has quickly worn off, leading to many users not bothering to renew their monthly fees, especially those who had already had verification statuses before Musk announced the implementation. NBA and Los Angeles Lakers Star LeBron James is one example:

Source: Daily Mail UK

Furthermore, Elon Musk has recently announced a temporary tweet view limit for users all over the platform despite the status as a means of potentially encouraging higher purchasing of membership fees, including verification statuses.

This is potentially another push factor away from Twitter for many users around the web, given a cheaper and much less restricted alternative in Threads.

Source: Bitcoinnews.com News

It's tough to make a distinctive judgment based on the small amount of insight available in the public domain. Still, judging from the inverse trajectory of both platforms in terms of user count and revenue flow, an argument could be made that ad generation of Threads is a more revenue-efficient scheme than monthly membership fees.

What's next?

In conclusion, is Threads the end of Twitter? The answer at this point would probably be a resounding no. Despite the encouraging success of Threads at such an early stage of its existence, Twitter's user count is still quadruple the amount that of Threads. The company is on track to post $3 Billion in revenue by the end of 2023, which puts the company well on its way to cutting the budget deficits that the company has generated over the last few years, in turn keeping its shareholders happy, and very much open to further innovation. Moreover, knowing Elon Musk and his business politics, when the pressure is on, he is going to be willing to attack the situation and end up on its right side, with the billionaire already pitching ideas as a means of rivaling one of Meta's other social media platforms, Instagram. That's what most people said about PayPal and SpaceX when facing massive issues. Many things were supposed to be the end of Elon Musk's companies, and yet here we are.

That being said, expect Mark Zuckerberg to continue developing policies aimed at maximizing Threads' traction and increasing Meta's capital stock, leading Threads towards becoming the number one source of mass information access. Whatever the outcome, one thing is certain - the developments of this situation are certainly one to watch out for.

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Written by Arsen Ashlayev | Proofread by Yasmin Uzykanova