Threads vs. Twitter: Where Institutions are Putting Their Money

It took nearly nearly two decades for Twitter to reach over 535 million users, and only five days for Meta Platforms (META) spin-off Threads to hit 100 million. A goal that wasn't achieved by Twitter until six years after it launched, according to a Social App Report 2023 by Business of Apps.

And financial institutions are noticing.

Threads crossed the 100-million mark less than a week after its launch, with Chief Executive Officer Mark Zuckerberg's microblogging app taking down ChatGPT as the fastest-growing platform online to hit 100 million signups.

While Twitter is still ahead of Threads at this point, financial institutions have started to wonder whether Zuckerberg's Threads might be on to something, with monetization becoming the biggest influencer.

What happened

Threads launched last week, on July 5, and as mentioned quickly rose mainly from organic demand, according to Zuckerberg.

“We haven't even turned on many promotions yet,” said Zuckerberg in a Threads post after announcing the 100-million users milestone.

The growth comes as celebrities to politicians continue to join the platform, marking the first serious threat to Twitter.

Not that it hasn't been attempted before. Bluesky and former President Donald Trump's Truth Social have also attempted to gain traction. However, none have come close to the success of Thread's launch.

Since the launch, Twitter has also seen an incredible decline in activity, according to data from Similarweb. Just two days after the Threads launch, Twitter traffic was down 5% from the same time the week before, and 11% lower year-over-year. Yet even without threads, the Elon Musk-owned platform has seen an overall decline of 4% year-over-year as of June of this year.

Of course Twitter management wasn't going to take all this lying down. Twitter CEO Linda Yaccarinon tweeted on July 10 that the platform experienced the “largest usage day” since February. However, she had no details to back up the claim.

“There's only ONE Twitter,” she tweeted.

Meanwhile, Musk not only mocked the launch of Threads, but threatened to sue Meta for using trade secrets and confidential information to build the company's application. In a letter to Zuckerberg from Musk, the latter claimed Meta had hired “dozens” of employees from Twitter, and that “Twitter intends to strictly enforce its intellectual property rights.” 

“Competition is fine, cheating is not,” Musk later tweeted.

Yet while the pair are noticeably similar, it could be quite hard to prove as there are major differences. For example, posts have allowance of up to 500 characters, supporting links, photos and up to five-minute videos. It also only has an application, with no direct messaging function. Furthermore, it lacks the hashtags and search functions that have appealed to advertisers on Twitter.

Financial institutions weigh in on the war

Even though at this point there is a lack of advertising capabilities, the ongoing turmoil at Twitter has financial institutions either taking sides, or backing both.

In fact, according to data from the Securities and Exchanges Commission (SEC), several firms that backed Elon Musk's $44-billion takeover of Twitter now also have large holdings in Meta.

This includes Baron Funds, which invested $100 million in Twitter, and now has more than $60 million of Meta stock. Fidelity has also taken both sides, having $316 million invested in Twitter, with around $415 million put into Meta.

Not everyone was on board with the move, however. Twitter investor Cartenna Capital divested its entire stake in Meta recently. Same with Honeycomb Asset Management, as of March of this year. However, things may turn around with the recent launch.

Overall, however, it looks as though we'll have to wait until more filings come out during the second quarter to see which financial institutions increased their holdings, and which perhaps divested completely of Meta.

While Twitter has been delisted since the Musk takeover, shares of Meta have climbed astronomically in the last year. Shares are currently up 85% in the last year, and 129% in the last six months alone.

Chart created by barchart.com

Can Threads bring in the big bucks?

The big question will likely come down to whether Threads can monetize in a similar fashion to Twitter, if not more so. Twitter had about 240 million monetizable daily active users in July 2022, which was disclosed before Musk took over the company.  However, this could have changed in the last year. According to numbers released by Musk, the company told advertisers it has 535 million monthly monetizable users.

As of writing, there are currently no advertising methods on the Threads app. Zuckerberg also stated that there would not be any thought about monetization until the platform looks as if it's on the path to one billion users. An achievement Twitter has yet to reach.

What's more, Threads isn't looking to replace Twitter, or so it claims. It's aiming to be a lighter focus, with subjects such as music, fashion and sports taking on key topics.

However, it's unlikely the app will be able to stay away from these “harder” topics of news. Even so, Meta hopes to keep it a “friendly” platform.

So what does this mean for investors looking to bring in cash from Threads? While it may not mean advertising for now, more users may mean more focus on Meta stock. And as it potentially reaches that one-billion mark, there are some analysts predicting a major revenue opportunity in the years to come.

This could be done through branded content in the short term, staying away from news and outright advertising. This success has been done before, with the takeover of Instagram proving that influencers can turn a profit.

Yet when it comes down to it, there are no guarantees. There's no guarantee Threads users will stick around, not is there a guarantee that it will reach one-billion users, or that branded content will work out for the company.

Not to say that Twitter doesn't have a hard path set out for it as well. Inner turmoil remains, and with lawsuits on the table it doesn't look like this drama will end any time soon.

Meanwhile, it's likely that institutions will continue to back both companies, until there is a clear path to which will succeed, and which company may fail.

On the date of publication, Amy Legate-Wolfe did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.