Threads, the latest social media platform launched by Facebook (NASDAQ:META) founder Mark Zuckerberg’s Meta Platforms Inc (NASDAQ:FB), is in a bit of a honeymoon phase.
Not only has it become the fastest-growing user application of all time, by a huge margin no less, but it is generating widely positive reviews from its 100 million-plus users.
The reason (at least one of them) is simple: As of today, Threads is entirely advertisement free.
Compare that to the barrage of doomscroll-interfering targeted ads on Elon Musk’s Twitter app, and you have a far smoother, nicer user experience.
But enjoy this honeymoon phase while you can, because there is no doubt that Threads will be monetised when the time is right.
But how much could Threads be worth, revenue wise?
A crude comparison, but Twitter’s financial statement may give an idea of where Threads can provide value.
Data and ads: A winning combo
Twitter filed its last 10-Q financial statement on July 26, 2022, before Musk took control and took it private.
According to that statement, quarterly advertising revenues averaged slightly over US$1bn.
‘Subscription and other’ revenues added around 10% on top of this. ‘Subscription and other’ essentially refers to selling data.
Since Musk’s takeover, these revenue streams have seen a considerable shakeup through the monetisation of Twitter Blue.
Twitter Blue authenticates a user’s profile and gives preferential treatment in the algorithm to those who pay US$8-plus per month.
Meta is unlikely to implement this as a revenue stream as Zuck has shown no intention of monetising Meta’s verification badges.
Revenues will predominantly come from advertising, and, given Zuckerberg’s history, data harvesting.
Zuck posted on Threads: “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.”
One firm, Evercore ISI, has thrown its hat in the ring with a US$8bn annual revenue estimation by 2025.
Evercore’s estimation supposes 200 million active users; hardly a stretch considering Threads hit 100 million users in the first five days.
For context, Meta’s core social media platforms – Instagram, Facebook – brought in over US$100bn in revenues in the last financial year.
Meta is expected to generate US$156bn in revenues in 2025.
Could Threads prove a lucrative venture? Indeed. Will Meta’s future depend on it? Hardly.
Which begs the question: Why launch Threads in the first place? Complete and comprehensive control of the entire social media landscape is the most obvious answer.
This is not Zuck’s first rodeo. The implementation of Reels on Instagram effectively killed Snapchat. And let’s not forget that Facebook heralded the end of MySpace as a going concern.
When you play the game of social media, you either win or lose.