September 29, 2023

Meta’s Threads Faces User Exodus: Retention Drops Despite Promising Start

Threads, Meta’s text-based app aimed at competing with Twitter, made a remarkable debut by amassing 100 million users within a mere five days, outpacing ChatGPT’s journey to the same milestone. However, the tech giant is now grappling with a significant challenge as it has lost more than half of those users, according to a disclosure by Meta CEO Mark Zuckerberg during an internal town hall meeting.

Mark Zuckerberg reportedly addressed the app’s retention issues candidly, admitting that while it was better than anticipated, it fell short of the company’s expectations. Data from SimilarWeb revealed a substantial decline in daily active users, plummeting from 49 million on July 7 to 23.6 million on July 14 and currently standing at less than 15 million.

Speaking on the user exodus, Zuckerberg noted that while it’s not ideal to lose a large number of sign-ups, he considers the drop in users as “normal.” He expressed optimism that retention rates would improve as they roll out more features to enhance the app’s appeal.

Chief Product Officer Chris Cox revealed Meta’s strategy to boost retention by introducing “retention-driving hooks” that would entice users to return to the app. An example of this would be integrating Threads with Instagram, allowing Instagram users to access essential Threads content seamlessly.

Despite facing headwinds in their primary social media businesses, Facebook and Instagram, with growth plateauing at 3 billion and 2 billion monthly users, respectively, Meta continues to invest heavily in Threads. Revenue from digital ads has also faced challenges due to changing economic conditions, the rise of short-form video platforms, and privacy policy changes by Apple affecting iOS.

Nevertheless, Meta’s latest earnings report projects double-digit percentage growth in sales for the third quarter, signaling confidence in the platform’s future. Investors have responded positively to Zuckerberg’s vision, driving Meta’s shares up by 9 percent following the encouraging earnings report and forecast.

While the drop in Threads users presents a significant hurdle for Meta, the company’s commitment to improving retention and continued optimism about the platform’s potential bode well for its future trajectory. As they explore new strategies and features to retain users and strengthen the app’s appeal, Meta remains determined to overcome the challenges and position Threads as a viable competitor in the social media landscape.