Analyst Predicts $8 Billion Increase in Meta’s Annual Revenue by 2025

According to Evercore ISI, Meta Platforms Inc.’s newest app, Threads, has the potential to generate significant revenue for the social media giant in the coming years, although it is still in its early stages.

Evercore ISI analysts, led by Mark Mahaney, estimate that message threads will reach nearly 200 million daily active users and generate about $8 billion in annual revenue over the next two years.

It’s off to a good start: Instagram’s new app, designed as a direct competitor to Elon Musk’s Twitter, gained 100 million users in the days after Meta launched the service last Wednesday.

That’s a fraction of the $156 billion in average annual revenue that analysts expect Meta to generate in fiscal 2025, according to data compiled by Bloomberg, but ahead of Twitter’s $5.1 billion in revenue and revenue in its last full public year. Last year, Meta generated about $117 billion in revenue and has over 3 billion active users on its social media apps.

Threads’ biggest competitor, Twitter, which has been controversial since Musk bought it last year, had 237.8 million users in July 2022.

It will be interesting to see if Threads can sustain reasonably strong growth and keep users engaged without cannibalizing engagement on Meta’s other platforms, Facebook and Instagram, Mahaney, who has a pair rating on the stock, wrote in a research note.

His colleague at KeyBanc Capital Markets Inc., Justin Patterson, also sees the app bringing in several billion dollars in ad revenue for the company, but it “will be an insignificant factor in the near term as Meta is likely to focus on adoption rather than monetization.”

Mark Zuckerberg, who has been very active on his new platform, seems to agree.

Late last week, he posted on Threads saying that “our approach is the same as all our other products: first get the product working well, then we’ll see if we can get it on a clear path to a billion people, and only then will we think about monetization at that point.”

Meta’s stock has more than doubled this year, jumping as much as 2.6% to hit a 17-month high in Monday trading. Along with other technology giants, Meta has been one of the driving forces behind the rise of the S&P 500 and Nasdaq 100 indices in 2023.