Twitter will fail to recreate a bumper 2020 dominated by US political wars, civil unrest, and the COVID-19 crisis
As people venture out following vaccine rollouts, Twitter will fail to recreate a bumper 2020 dominated by US political wars, civil unrest, and the COVID-19 crisis, Wall Street analysts said. Other digital ad firms such as Facebook and Alphabet’s Google, whose stocks soared after posting blockbuster results this week, have benefited primarily from the easing of restrictions as people get vaccinated.
That is not the case with Twitter. On Friday, the social media giant posted first-quarter sales and user figures that were largely in line with analyst expectations but cautioned that the current quarter may be the worst yet as it prepares for a weaker 2021.
“The company’s poor future guidance indicates that repeating this result would be extremely difficult,” said Haris Anwar, senior analyst at Investing.com, adding that as vaccine rollouts ramp up, more people will seek out offline activities.
Despite the fact that other tech firms have predicted a decline in users this year, they remain optimistic about ad spending as advertisers try to find customers willing to spend and travel after being stuck indoors for over a year.
“Twitter doesn’t seem well placed to really capture the most competitive part of the digital advertising economy,” said Michael Nathanson, senior research analyst at Moffett Nathanson. “They lack both sufficient scale of users and first-party data signals that draw performance-driven marketers.”
On Friday, Twitter’s pledge to concentrate on new products and features did nothing to calm investor fears. However, some analysts believe the company’s current-quarter revenue outlook is optimistic, as newer app features and the return of live events are expected to increase user engagement and revenue in the coming months.
After the company forecasted tepid revenue growth for the second quarter, at least eight brokerages lowered their price targets on Twitter. 29 analysts have a “sell” or lower rating on the stock, while the rest have a “buy” or higher rating. According to Refinitiv reports, the stock’s current median price target is $70.