2. Why is Meta launching a Twitter alternative?

Meta is clear about wanting to poach Twitter’s users. Meta Chief Product Officer Chris Cox described Threads as “our response to Twitter” at a companywide meeting in June reported by The Verge. “We’ve been hearing from creators and public figures who are interested in having a platform that is sanely run,” he said. That’s a pointed reference to how Musk has been running the company since he purchased it for $44 billion in October 2022. 

Eoin Treacy's view

When a social media company is as large as Meta Platforms, there are only two ways to grow. The first is how they got so big in the first place. That means capturing a demographic and holding on to them. Facebook users tend to be middle aged; Instagram users are millennials and younger, TikTok has generation Z and Roblox purports to have an even younger generation. Predicting which app today’s children will use most prolifically is a near impossible task but the aforementioned have at least demonstrated staying power.

The second way is to look at what competitors have done, copy the best features and try to capture market share. YouTube has created YouTube shorts to compete with TikTok. Instagram created filters that compete with Snapchat. The evolution of Instagram’s Threads feature is a blatant attempt to poach disaffected Twitter users and in the process capture marketing spend. Meta had a great deal of experience navigating the quagmire of content moderation and has so far kept on the right side of regulators perception of the success of those efforts. Twitter continues to play fast and loose with moderating hate speech and that is likely to be formidable future headwind.

Meta continues to extend the rebound that began in November and a break in the steep sequence of higher reaction lows would be required to check momentum.

Alphabet is putting in a higher reaction low as it consolidates its short-term overbought condition.