The world of social media is constantly evolving, and with that comes changes in user behavior and market dynamics. In recent news, an investor in Elon Musk’s Twitter has decided to write down their stake in the business by a significant 47%. At the same time, an analysis firm has made claims about the usage decline of the “Twitter killer” Threads app since its launch by Mark Zuckerberg’s Meta. Despite these developments, there are individuals who remain optimistic about Twitter’s future. This article delves into the details of the stake write-down and the threads user fall, shedding light on the perspectives surrounding these events.
ARK Investment Management’s Stake Write-Down
ARK Investment Management, a prominent investor in Elon Musk’s Twitter, has made headlines with its decision to write down its stake in the social media platform by a substantial 47%. This move has been attributed to advertisers reigning in their spending on Twitter, affecting the platform’s revenue streams.
Cathie Wood, the founder and CEO of ARK, expressed her positive outlook on Twitter despite the stake write-down. She emphasized that the write-down should not be seen as reflective of their fundamental outlook and belief in the long-term return on investment for Twitter’s shareholders. Despite the challenges faced by the platform, Wood maintains a bullish stance on its prospects.
Decline in Threads App Usage
One of the factors contributing to the challenges faced by Twitter is the decline in usage of the Threads app. Threads, often dubbed the “Twitter killer,” was launched by Mark Zuckerberg’s Meta with the aim of providing users with an alternative to Twitter. However, an analysis firm has claimed that the app’s usage has fallen by a significant 50% since its launch.
The analysis firm’s estimation of the decline in Threads’ user base highlights the uphill battle faced by the app in its attempt to gain traction. While it initially showed promise with 49 million daily active users just two days after its launch, the numbers plummeted to 23.6 million within a week. This decline represents approximately 22% of Twitter’s audience, as reported by Similarweb, the data firm behind the estimation.
Twitter’s Valuation and Financial Situation
The decline in Twitter’s value has been a matter of concern, and it was publicly acknowledged by Elon Musk himself. In March, Musk revealed that the platform had lost over half of its value. Additionally, Fidelity, another asset management firm, has also written down the value of its stake in Twitter to around $15 billion. This comes after Musk’s acquisition of Twitter in October 2022 for a staggering $44 billion.
Musk’s recent statement indicated that advertising on Twitter, which serves as the primary source of income for the platform, has experienced a significant decline of nearly 50%. Furthermore, Twitter’s financial situation remains challenging, with the business still being cashflow negative. This metric is crucial in evaluating whether a heavily indebted business like Twitter can effectively manage its interest payments.
Cathie Wood’s Commitment to Twitter
Despite the setbacks faced by Twitter, Cathie Wood remains a committed investor and has expressed her interest in acquiring more shares in the platform. Twitter boasts an impressive list of backers, including influential entities such as the cryptocurrency exchange Binance, the Saudi investor Prince Alwaleed bin Talal, and the tech billionaire Larry Ellison. Wood’s willingness to increase her stake demonstrates her confidence in the long-term potential of Twitter.
Elon Musk, who is widely known as the world’s richest man, acquired Twitter with the support of equity investors like ARK and a substantial $13 billion debt package. Wood’s desire to acquire more shares at current price levels, despite the lack of availability, speaks volumes about her conviction.
Similarweb’s Estimation of Threads’ User Base Decline
Similarweb, a renowned data firm, has conducted an analysis of the Threads app’s user base decline. According to their estimations, the app experienced a sharp drop in daily active users within a week of its launch. The number of daily active users on Threads plummeted from 49 million on July 7, just two days after its introduction, to 23.6 million by July 14. These estimations were based on the usage data gathered from Android phones.
Similarweb’s insights suggest that Threads is missing essential features and fails to offer a compelling reason for users to switch from Twitter or develop a new social media habit with Threads. David Carr, the senior insights manager at Similarweb, shared his perspective on the matter, highlighting the challenges faced by the app in its quest for success.
Meta’s Response to Threads’ User Decline
In response to the decline in Threads’ user base, Mark Zuckerberg, the founder and CEO of Meta, acknowledged the setback while expressing hope for the future. He mentioned that “tens of millions” of users are returning to the app on a daily basis, indicating positive signs of user engagement. Zuckerberg also emphasized the need for time to stabilize the app and make improvements to ensure its success in the long run.
The recent stake write-down by ARK Investment Management and the decline in Threads app usage have presented challenges for Twitter and its stakeholders. However, amidst these difficulties, individuals like Cathie Wood remain optimistic about Twitter’s future, expressing their commitment to the platform and desire to increase their stake. While Threads has faced a significant decline in user numbers, Meta, the company behind the app, is actively working towards stabilizing it and addressing user concerns. These developments shed light on the ever-changing landscape of social media platforms and the competitive dynamics within the industry.
- What is ARK Investment Management? ARK Investment Management is an investment firm known for its focus on disruptive innovation. The firm seeks to invest in companies that are at the forefront of technological advancements and have the potential to transform various industries.
- Why did Twitter’s value decline according to Musk? Elon Musk stated that Twitter’s value had declined by over 50% due to a significant drop in advertising revenue, which is the platform’s primary source of income. Musk also mentioned that Twitter continues to face challenges in managing its cashflow.
- Who are the notable backers of Twitter? Twitter has received support from various influential backers, including Binance, one of the leading cryptocurrency exchanges, Prince Alwaleed bin Talal, a prominent Saudi investor, and Larry Ellison, a renowned tech billionaire.
- What is Similarweb? Similarweb is a data analytics company that provides insights into website and app analytics. It offers valuable information about user behavior, traffic sources, and audience demographics, helping businesses make data-driven decisions.
- How is Meta responding to Threads’ decline? Mark Zuckerberg, the CEO of Meta, acknowledged the decline in Threads’ user base and expressed optimism about the app’s future. He mentioned that millions of users are returning to the app daily and emphasized the need for time to stabilize the platform and enhance its features.