One word … META. Ask most millennials and Gen-Zers the meaning and answers will flood in.
Formerly known as Facebook, Meta (NASDAQ:META) is the name for the bigger umbrella owning and operating Facebook, Instagram, WhatsApp and now Threads.
Its infamous CEO Mark Zuckerberg seems to have no end in sight when it comes to acquiring and growing the Meta brand. According to the Meta website itself, Threads has been introduced as a new way to share information, with text.
It’s very similar to Twitter, aka X, but with some differences. In most cases, a tweet can contain up to only 280 characters unless the user has paid for a certified Twitter Blue subscription, which allows for a 4,000-character tweet.
When looking at Threads, posts can contain 500 characters including links, photos and even videos that are five minutes long. As it is a Meta product; cross-platform sharing has never been easier.
Meta is looking to make the app compatible with an open social networking protocol, where users will be able to find communities that suit them, without the restriction of not having that specific app.
No one can refute the massive growth Threads has seen, with the new app reaching around 100 million users in a short time.
“Threads reached 100 million sign-ups over the weekend. That’s mostly organic demand and we haven’t turned on many promotions yet. Can’t believe it’s only been five days!” Zuckerberg said in a statement soon after it launched July 5.
Curiosity about the app has fallen, however, with daily active user count down by 81 per cent, according to Sensor Tower via CNN. As he did in the early days of monetizing Facebook, Zuckerberg will need to work some tech magic to get Threads back on track to seriously rival Twitter.
To give some historical context, let’s look at Facebook. It was developed almost two decades ago and spent five years to attain the same numbers.
Mark Zuckerberg added that he is “… very optimistic about how the Threads community is coming together. Early growth was off the charts, but more importantly tens of millions of people now come back daily. That’s way ahead of what we expected.”
Threads may have been just what the doctor ordered with Meta posting a revenue decline for the first time as a public company since back in 2012. The company reported more than $28.5 billion in revenue in June 2022, a 1 per cent drop when comparing with the same quarter the previous year.
Another concerning factor has been ad revenue, with a 14 per cent year-over-year decrease attributed to the average price per ad.
Given the unfavorable economy and inflation, tech companies have not been able to escape the situation. Massive hits to their bottom lines have been a top concern, with Meta and Twitter enforcing substantial layoffs. Meta specifically, dropped 20,000 employees over two different sessions.
When looking at the trajectory of some of these tech companies and how they have faired in the marketplace, there have been some big winners.
The initial public offering price for Facebook was $38 per share in May 2012. It was one of the biggest in tech history, valuing the company at more than $100 billion.
Shares opened at $42.05, slightly above the IPO price of $38. The price briefly peaked at $45 but then fell back towards the IPO price. The company’s underwriters had to buy shares to keep the price above the $38 IPO level, which was unexpected. Meta’s market cap now has a net worth of more than $809 billion.
As for another tech company, Microsoft, (NASDAQ: MSFT) who acquired business social media site LinkedIn, it went public in March 1986. The initial IPO price was $21. However, because of high demand, the shares opened at $25.50 and closed a couple of dollars higher.
The IPO was a huge success, with shares rising rapidly in years to follow. Its market cap is now valued at more than $2.5 trillion.
There is also Twitter, which went public in November 2013. Its IPO price was set at $26. However, the stock didn’t start trading at that price because of strong investor demand.
When the market opened, Twitter’s shares started trading at more than $45, a big jump from its IPO price. From that point, shares continued to climb to as high as $50 on its first trading day, before closing at $44.90, a 73 per cent gain from the IPO price. The company has since been delisted when Elon Musk bought it, and its market cap is now valued at $41 billion.
Since than, Twitter has dealt with different business challenges, including monetization issues, user growth, and its very public change of leadership.
These companies had relatively modest IPOs but have since seen their stock prices grow.
Microsoft (NASDAQ: MSFT) was last trading up at US$328.12 while META (NASDAQ:META) is down, US$312.02.
These cases underline the potential rewards of investing in an IPO, but also remember that not all IPOs are guaranteed to be successful. Do your homework and research companies before deciding to invest.
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