📸📝 Is Meta's Threads the Next Big Thing?
Hi all!
You may (or may not) have noticed that we did not publish a Wednesday edition of Hump Days last week. That was intentional. Rickie and I are taking a little bit of time off to recharge in July. We still might post some Wednesdays this month, but I just wanted to give you a heads-up that they aren’t guaranteed haha. In August, we’ll be back to our regularly scheduled programming.
We’ll still be coming out with at least two YouTube videos this month, and currently, I’m thinking of different ways to innovate the content moving forward for the rest of the year. The idea is to still do much of the same we have been doing, just twist/adapt very slightly to see if we can make ideas stick better.
In this edition, we’re diving into Meta’s new product, “Threads” - the Twitter clone. Enjoy!
— Humphrey, Rickie, Tim
Market Report
The Death of Twitter?
Meta's new social media platform, Threads, experienced a surge in growth, with 70 million sign-ups recorded in its first two days. The rapid growth has been largely due to the platform's integration with Instagram, allowing users to sign up using their existing Instagram accounts. Internal company data revealed that users had already made over 95 million posts and 190 million likes by Thursday afternoon. Despite not yet launching in Europe due to regulatory complications, Threads' growth potential remains substantial, with analysts suggesting that if one in four Instagram users used Threads monthly, it would match Twitter's size.
Threads could attract a broader audience and focus compared to Twitter due to its connection with Instagram, a platform primarily focused on visual content. While Twitter is widely used by journalists, politicians, and academics, Threads, if continuing Meta's policy to de-emphasize political content as it does on Facebook, could differentiate itself from Twitter's news and politics-heavy user base.
Even with this potential differentiator, Threads has already seen many politicians sign up. More than a quarter of Congress' 535 members have created accounts, along with multiple Republican presidential candidates and high-ranking White House aides. Advertisers familiar with Meta's other platforms are also likely to see Threads as a viable alternative to Twitter, particularly if they regard it as a safer option for brand promotion.
So what does this mean for Meta stock? According to Bank of America…
“Assuming the app is successful, Meta captures 250mn average users in 2024, and that Meta chooses to start the revenue ramp next year and reaches 50% of Twitter’s 2021 APRU (which was $23), we estimate a $2-3bn 2024 revenue opportunity. Even if Meta holds back ads for a few years to aid app traction, given Meta’s strong execution history in maintaining users and scaling revenues, we believe the Street will give Meta credit for monetization at or above Twitter levels ($23 ARPU) if users are engaged (strong time spent metrics). Key execution milestones from here are ramping up influencer/celebrity content contributions, and adding features that users want, which we expect to come quickly.” - BofA Research
Market Update
Following the strongest six months for the S&P 500 in five years, short sellers have been pulling back from their bearish positions as the stock market continues its rally. Data shows that bearish positions in ETFs are at a three-year low, and shorts in S&P 500 futures have quickly disappeared. Among newsletter writers tracked by Investors Intelligence, those classified as bullish rose to 54.9%, while the proportion of bears fell to 18.3%. That’s in stark contrast to the end of last year when bears exceeded bulls.
While the strong market rebound is forcing short sellers to reconsider their positions, this change in sentiment is occurring as worries about the Federal Reserve's efforts to curb inflation are reemerging, coupled with forecasts of a third consecutive quarter of falling corporate earnings.
Short sellers reportedly lost an estimated $37 billion in June, and the losses have been mounting throughout the year as rising optimism around AI is driving technology stocks, boosting the S&P 500 to double-digit returns this year. Despite the ongoing rally, there remains a prevailing lack of confidence in the economy. Active funds have reduced exposure in economically sensitive companies like energy, and many are predicting an economic recession is delayed but not completely averted.
Labor Market Update
Job growth in the US slowed to 209,000 in June, with the three-month average declining to 244,000. Despite this, the job market remains strong as workers continue to rejoin the labor force, with the participation rate for workers aged 25-54 hitting its highest level since May 2002. Interestingly, the construction sector added 23,000 jobs in June, whereas typically robust sectors such as hotels, bars, and restaurants saw a significant slowdown in job additions.
Despite the slowing pace of job growth, it's still more than double the rate required to keep the labor market tight, given the slowing growth of the US population. The continued strong hiring has also contributed to a significant increase in the labor force participation rate among prime-age women. While the labor market is showing signs of slowing down, it's doing so from a position of strength, suggesting a shift towards a slower but more sustainable pace of economic growth.
Job postings on Indeed have dropped 17% since last year, indicating a decline in employer demand, though it remains strong by historical standards. Wage growth, too, has started to slow down, although it's still high compared to historical standards.
Even though the job-quitting rate has declined slightly, it remains above its pre-pandemic level, suggesting wage growth may continue to decrease slowly. Meanwhile, the national layoffs and discharge rate has declined to 1%, indicating a relative reluctance from employers to let go of employees. Despite recent volatility in job loss rates, there has been no substantial increase in layoffs. Wage growth remains elevated due to employer competition for hires across sectors, but there's evidence of a slow cooling trend as the posted wage growth continues to decline.
Forecast Ahead: Earnings Season is Back!
Big Number: $650 million
The PowerBall jackpot, currently standing at an estimated $650 million, remains unclaimed after Saturday's draw resulted in no jackpot winners. The cash option for the upcoming Monday draw is projected at around $328.3 million, making it the ninth-largest PowerBall jackpot on record and the second-largest this year. Although the main prize went unclaimed, three tickets from California, Illinois, and Colorado matched the first five numbers, winning $1 million each. The record for the largest win still stands at $2.04 billion.
You’ll have a 1 in 292.2 million chance of landing the massive prize — you have a better chance of being struck by lightning. Don’t be tempted!
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