Meta sinks as Wall Street weighs in on Threads launch (update)
Justin Sullivan
Meta Platforms (NASDAQ:META) shares fell nearly 1% on Thursday as Wall Street analysts weighed in on the launch of its Twitter competitor, Threads.
Wells Fargo analyst Ken Gawrelski said that while he expects the near-term impact of Threads to be limited, Meta (META) could see a long-term sales boost.
"Framing imminent launch of Instagram Threads, we see [opportunity] for incremental revenue and EPS contribution at maturity between 1-3% annualized," Gawrelski wrote in an investor note.
Gawrelski added that Threads, which is linked to Instagram, could result in an additional 13 to 64 cents per share on an annualized basis, assuming just monetization in the U.S., as the European launch of the new short-posting text app is unclear and monetization in the rest of the world remains "limited." 
Gawrelski, who reiterated his equal-weight rating and $313 price target on Meta (META), also posited that the Zuckerberg-led company should take a balanced approach to Threads rather than focus on monetization.
"Despite Twitter's much smaller size relative to META and GOOGL, it has been and continues to be a lightning rod for controversy and regulatory scrutiny," Gawrelski continued. "Attempting to be the digital public square, though noble in its mission, has been fraught with challenges in governance and garnering ad demand."
Bank of America analyst Justin Post, who has a buy rating and per-share price target of $320 on Meta (META), said Threads' ties to Instagram and celebrity adoption are keys to its success.
"Meta, is launching at a favorable time given recent user restrictions and fees, and celebrity/advertiser pushback at Twitter," Post wrote in an investor note. "Linking with Instagram should help jumpstart the platform but could be a controversial move, as we would expect added regulatory scrutiny and pushback on big platform and data advantages."
KeyBanc Capital Markets analyst Justin Patterson, who has an overweight rating on Meta (META), also said the near-term impact is not likely to be material, but it could help in the medium and long-term.
"If Meta can be at least one-third the size of Twitter's U.S. audience or reach 50% of Facebook's UCAN audience, we see an $800M-$6.7B (1-5%) lift to our [estimated 2024] revenue, with international monetization likely comparable to the U.S.," Patterson wrote.
After the public launch of Threads on Wednesday, Meta (META) CEO Mark Zuckerberg said more than 10M people had signed up for the app.
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