Can Threads make more money than Elon Musk’s Twitter?

In a light-hearted exchange, tech billionaires Mark Zuckerberg and Elon Musk have joked about a potential cage match, but in the realm of business, the competition between their companies has already begun. Within less than 24 hours of its launch, Zuckerberg’s Threads, an alternative to Twitter, amassed around 30 million sign-ups, establishing itself as a credible contender in the social media landscape.

While this user base is still a small fraction of Twitter’s hundreds of millions of users, analysts believe that Zuckerberg’s Meta has a good chance of enticing a portion of its massive 3 billion-plus user base on platforms like Facebook, Instagram, and WhatsApp to adopt the new offering, potentially bringing advertisers along with them.

Zuckerberg, whose company Meta earned over $117 billion in sales last year, has a proven track record of selling advertisements, unlike Musk, who has shown disdain for advertising at Tesla and has been exploring alternative ways to fund Twitter.

Initially, Zuckerberg stated that there would be no ads on Threads as the company focuses on refining the app’s user experience. However, analysts suggest that eventually introducing advertisements to Threads could contribute 1% to 5% of Meta’s overall revenue, potentially generating over $6 billion in the most optimistic scenario, according to Justin Patterson, an equity research analyst at KeyBanc Capital Markets.

Although not a substantial amount, this additional revenue is significant, particularly as Meta seeks to address the impact on ad sales caused by stricter privacy rules implemented by Apple. Moreover, it places Meta within reach of Twitter, which generated $4.5 billion in ad revenue in 2021 prior to Musk’s takeover, which triggered significant changes within the company.