Meta Platforms stock slipped Monday as investors sized up a new, fast-rising social media competitor. OpenAI's Sora app for creating and sharing videos using generative AI has soared on charts of downloads over the past week.
OpenAI, the startup whose ChatGPT product sparked the current AI investing frenzy, launched Sora last Tuesday. It is an invite-only demo for Apple devices. Despite that, Sora soared to No. 1 on the iOS app download charts in the U.S. by Friday, according to tracking firm Sensor Tower.
A blog post from OpenAI says the app allows users to "create, remix each other's generations, discover new videos in a customizable Sora feed, and bring yourself or your friends in via cameos."
The app has quickly raised concerns about the use of copyrighted materials, disinformation and the proliferation of AI "slop." But Sora's ability to quickly create and share videos using a single text prompt is making it a hit.
OpenAI Chief Executive Sam Altman wrote on his blog Friday that "people are generating much more than we expected per user," and people are generating "a lot of videos for very small audiences."
Sora's rapid growth comes as Meta attempts to grow its own user-generated AI video feed called Vibes. Meta launched Vibes within the Meta AI app on Sept. 25.
What Sora Means For Meta's Facebook And Instagram
Investors are debating whether Sora represents a competitive threat to Meta's Instagram and Facebook. OpenAI's rapid rise has to this point mostly been seen as a threat to Google, with ChatGPT serving some of the same functions as a search engine.
"Most people we spoke with were not alarmed by Sora risk to Meta," Mizuho analyst Lloyd Walmsley wrote to investor clients Monday. "Our one-liner: Sora worst case is it becomes like TikTok (roughly 5% probability in our view) and an alien from space looking at Meta financials would be hard-pressed to detect a big negative from TikTok. We were impressed by the product, but social does not strike us, at first blush, as a huge area of focus for OpenAI given the broad potential roads ahead."
Meta has previously launched new features like Instagram Stories and Reels to ward off competition from Snapchat and TikTok. But Meta could have a harder time matching Sora, technology analyst Ben Thompson wrote in a blog post Monday.
A big challenge for Meta "is that their AI capabilities simply don't match OpenAI, or Google's for that matter," Thompson wrote. "It's clear that Meta knows this is the case — look no further than this summer's hiring spree and total overhaul of their AI approach — but creating something like Sora is a lot more difficult than copying Stories or short-form video. I imagine this shortcoming will be rectified, but Sora is in the market now."
Meta Stock Falls Below Base
On the stock market today, Meta stock is down a fraction at 708.65 in recent trades.
With Monday's decline, Meta shares have slipped decisively below the bottom of a previous flat-base pattern, according to IBD MarketSurge.
Meta stock is ahead 20.3% year to date. But shares of the social media giant are down 11% from a high of 796.25 in early August. That was after Meta's strong Q2 results ignited a rally for the company's stock.
The Facebook parent company's stock closed September roughly flat and is down about 4% in October.
