After hitting 18-month high ahead of launch, Meta stock up 1% after millions sign up on Threads

Shares of Meta edged lower on Thursday, July 6, even after more than 10 million users signed up to Threads, Meta's rival to Twitter, within the first few hours of its launch. The stock hit an 18-month high to $295.29 in the previous session as the Facebook and Instagram parent company prepared to launch Instagram Threads, its long-awaited answer to rival Twitter.

Threads is the biggest challenger yet to Elon Musk-owned Twitter, which has seen a series of potential competitors emerge but not yet replace one of social media's most iconic companies, despite its recent struggles.

 The Threads app went live on Apple and Android app stores in 100 countries and will run with no ads for now. Twitter, by comparison, had 229 million monthly active users in May 2022, according to a statement made before Musk's buyout of the social media platform.

"10 million sign ups in seven hours," Zuckerberg wrote on his official Threads account on Thursday. Accounts were already active for celebrities such as Jennifer Lopez, Shakira and Hugh Jackman, as well as media outlets including The Washington Post and The Economist. Zuckerberg spent the first few hours of the platform's launch replying to new users.

While Threads launched as a standalone app but was introduced as a clear spin-off of Instagram. Threads offers a built-in audience of more than two billion users (Instagram boasts of more than 2 billion monthly active users), sparing the new platform the challenge of starting from scratch. 

Users can log in using their Instagram credentials and follow the same accounts, potentially making it an easy addition to existing the habits for Instagram users.

At least four brokerages raised their price target on Meta, whose shares have already more than doubled in value this year, according to reports.

"No doubt there will be bumps in the road, but Threads could provide support to Meta's share price if it turns out to be a success, as its huge number of initial sign ups suggests," Victoria Scholar, head of investment at Interactive Investor told news agency Reuters.

Analysts have said Threads' ties to Instagram might give it a built-in user base and advertising apparatus. This may siphon ad dollars from Twitter at a time when Musk is trying to revive its business. "Investors can't help but be a little excited about the prospect that Meta really has a 'Twitter-Killer'," Danni Hewson, head of financial analysis at investment firm AJ Bell told Reuters.

Much like Twitter, the app features short text posts that users can like, re-post and reply to, although it does not include any direct message capabilities. Posts can be up to 500 characters long and include links, photos and videos up to five minutes long, according to a Meta blog post.

Threads does not have hashtags and keyword search functions, which means users cannot follow real-time events like on Twitter. Also, it does not yet have a direct messaging function, according to reports.

Threads' arrival comes after Zuckerberg and Elon Musk have traded barbs for months, according to reports. Musk bought Twitter for $44 billion last October, but its value has since plummeted amid deep staffing cuts and content moderation controversies that have alienated both users and advertisers. Its latest move involved limiting the number of tweets users can read per day.

Zuckerberg is widely understood to be taking advantage of Musk's chaotic ownership of Twitter to push out the new product, which Meta hopes will become the go-to communication channel for celebrities, companies and politicians.

Zuckerberg also noted the challenges that big public social media forums bring. "I think there should be a public conversations app with 1 billion people on it. Twitter has had the opportunity to do this but hasn't nailed it. Hopefully we will," he wrote.

Share prices of Meta have now climbed more than 137 per cent year-to-date following a pair of better-than-expected earnings reports, according to a report by Forbes. Shares of Meta were trading 0.30 per cent lower at $293.57 per scrip on the Nasdaq 100 index at 11:32 AM ET (eastern standard time).

With inputs from AFP, Reuters