Twitter disappoints while rivals make hay amid pandemic boom - TechCentral

Twitter disappoints while rivals make hay amid pandemic boom

Twitter gave a disappointing revenue forecast, a sign the social media service hasn’t fully capitalised on the digital advertising boom amid the pandemic like companies such as Facebook and Google. Shares fell about 8% in extended trading.

Sales will be US$980-million to $1.08-billion in the second quarter, the San Francisco-based company said on Thursday in a statement. Analysts, on average, projected $1.05-billion.

Twitter’s sales gained 28% in the first quarter, notably lagging behind some of its digital advertising peers. Facebook and Google this week reported quarterly revenue that smashed analysts’ estimates, buoyed by businesses pushing commerce and travel, which are expected to bounce back as lockdowns ease. Twitter relies more on big-brand advertising, which is typically slower early in the year after the busy holiday quarter.

Those peers set the bar high for Twitter, leading to disappointment in the results, said Mandeep Singh, an analyst at Bloomberg Intelligence. “It goes to show that probably Google and Facebook had more exposure to e-commerce advertising than Twitter,” he said.

Twitter also reported that daily active users increased 20% to 199 million, adding seven million since the previous quarter. The company in February estimated year-over-year growth would be 20% in the March quarter, which was the first period since former US President Donald Trump was banned from the service. Trump was kicked off Twitter on 6 January for repeated violations of the company’s rules, and some analysts were concerned that the former president’s absence might hurt the business.

Shares fall

Revenue was $1.04-billion in the three months ended 31 March, matching analysts’ average estimate. Net income was $68-million, or $0.08/share, from a loss of $8.4-million, or $0.01, in the quarter a year earlier.

The stock dropped to a low of $58.50 in extended trading after closing at $65.09 in New York. The shares have gained 20% this year.

Twitter has been at the centre of public discussion for much of the year, in part because of its ban of Trump and the scrutiny from the US congress over its role with other social media sites in policing user speech. The company is also working on several new products, including audio chatrooms to compete with the popular startup Clubhouse, which could lead to more future revenue.

User growth will begin to slow down in the coming quarters as Twitter compares itself to last year’s boom driven by the global pandemic and a contentious US election. The company expects to increase users in “low double digits” percentages for the rest of 2021, according to Twitter’s shareholder letter. Those projections were previously announced in February.

The pandemic hasn’t slowed Twitter’s hiring. The company now has 6 100 total employees, up 20% from a year ago. The surge in new employees has also increased the company’s stock-based compensation costs. Twitter increased its 2021 estimate for stock-based compensation to $600-million from a range of $525-million to $575-million previously reported.

Although the company is building subscription products to complement its advertising business, it didn’t mention any new plans or details in Thursday’s shareholder letter.  — Reported by Kurt Wagner, (c) 2021 Bloomberg LP

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