Meta's Threads to Raise Stakes for Snap, Pinterest

tech.hindustantimes.com:

The arrival of Meta Platforms Inc.'s Twitter challenger further complicates the investment case for social media firms Snap Inc. and Pinterest Inc., whose share price recoveries lag their larger rival.

Facebook parent Meta is by far the dominant player in the sector, and that is extending to its stock this year. Shares have outperformed by leaps and bounds, with the rapid user growth of Threads the latest demonstration of a reach and scale that has made it a favorite among investors and analysts.

“It's hard to make a case for owning Snap or Pinterest over Meta, since there's no arguing that Meta is the strongest in the sector and the one that's mostly likely to get stronger,” said Jay Woods, chief global strategist at Freedom Capital Markets.

While Threads is more of a direct competitor to Twitter — which has struggled since it was taken private by Elon Musk — than Snap or Pinterest, the service amassed 100 million users within a week of its launch, underlining how smaller platforms may struggle in the highly competitive market for online ads. Cowen upgraded Meta on Thursday, citing the opportunity to monetize Threads.

Amid gains in megacap tech stocks, Meta has soared 161% this year, second only to Nvidia Corp. among components of the Nasdaq 100 Index. Having since pulled back on costs that were exacerbated by its metaverse initiative, Meta has a lever for earnings growth that Snapchat parent Snap, and digital pin-board platform Pinterest, lack.

Meta rose 1.1% on Thursday, while Snap gained 2% and Pinterest was little changed. The Nasdaq 100 gained 0.8%.

For Snap and Pinterest to be more compelling for investors, “they would need to compete with a better product idea than Meta,” said Woods. “I'm not sure what that would be,