Important information: The value of investments and any income derived from them may go down as well as up. You may not get back the amount originally invested. Past performance is not a reliable indicator of future results.
Key takeaways
Source: statista.com; visualcapitalist.com
The business case
On paper, Threads will not bring additional revenue to Meta, at least for now. Threads is currently an ad-free app. However, as a sort of loss leader, it provides a platform for users of social media, who through Threads also get exposure to Instagram and Facebook, possibly reducing their reliance on Twitter. Creating Threads improves the likelihood of stickier traffic for Instagram and Facebook.
Meta’s new launch coincides with a number of unpopular decisions made by Twitter owner, Elon Musk. Musk seems to keep implementing controversial changes within Twitter, the latest being a cap on the number of tweets a user can view on a daily basis, reportedly to limit data scraping and manipulation. Many feel that Musk is undermining what made Twitter so popular and widespread and is preventing it from realising its full potential. As the company was taken private by Musk last year, the markets no longer have their say.
Meta’s share price recovery from last year has been impressive. The stock is up c.160% year to date and has rallied 15.6% in the last month. This shows that not only are the big US tech firms prospering this year (as we covered last week), but Mark Zuckerberg is winning over investors. Threads may not make much direct difference to profit for Meta, and it may not impact Twitter too much in the end, but it goes some way to reinforcing Meta’s proposition, and its position as one of the dominant social media platforms in the world.
Bowmore portfolios
Though we do not hold direct allocations to equities like Meta, portfolios do have underlying exposure and have benefitted from this over the last six months as Meta’s share price has risen. The recent impact Threads has had on rhetoric around Twitter stands as a reminder that ongoing innovation in growth and tech sectors can disrupt the marketplace and established firms, a theme we access through our technology and cybersecurity allocations.
Source: Refinitiv – Market returns as at 13/07/2023
- Meta launch new social media platform Threads
- The ad-free platform receives fastest user signups of any application
- Twitter boss Elon Musk continues to implement controversial policies
Source: statista.com; visualcapitalist.com
The business case
On paper, Threads will not bring additional revenue to Meta, at least for now. Threads is currently an ad-free app. However, as a sort of loss leader, it provides a platform for users of social media, who through Threads also get exposure to Instagram and Facebook, possibly reducing their reliance on Twitter. Creating Threads improves the likelihood of stickier traffic for Instagram and Facebook.
Meta’s new launch coincides with a number of unpopular decisions made by Twitter owner, Elon Musk. Musk seems to keep implementing controversial changes within Twitter, the latest being a cap on the number of tweets a user can view on a daily basis, reportedly to limit data scraping and manipulation. Many feel that Musk is undermining what made Twitter so popular and widespread and is preventing it from realising its full potential. As the company was taken private by Musk last year, the markets no longer have their say.
Meta’s share price recovery from last year has been impressive. The stock is up c.160% year to date and has rallied 15.6% in the last month. This shows that not only are the big US tech firms prospering this year (as we covered last week), but Mark Zuckerberg is winning over investors. Threads may not make much direct difference to profit for Meta, and it may not impact Twitter too much in the end, but it goes some way to reinforcing Meta’s proposition, and its position as one of the dominant social media platforms in the world.
Bowmore portfolios
Though we do not hold direct allocations to equities like Meta, portfolios do have underlying exposure and have benefitted from this over the last six months as Meta’s share price has risen. The recent impact Threads has had on rhetoric around Twitter stands as a reminder that ongoing innovation in growth and tech sectors can disrupt the marketplace and established firms, a theme we access through our technology and cybersecurity allocations.
Source: Refinitiv – Market returns as at 13/07/2023