Twitter is growing but hints at trouble ahead
Twitter usage spiked to 166 million daily users in the first quarter of 2020, as more people flocked to the site to keep up with news on the coronavirus pandemic. The usage growth is the largest Twitter has ever reported year-over-year, up from 134 million during this same quarter last year (and up from 152 million daily users at the end of 2019).
But the growth wasn’t enough to offset the sudden advertising decline caused by the pandemic — and it could pose problems for Twitter CEO Jack Dorsey, who’s on shaky ground with a group of activist investors.
Twitter’s ad revenue started to fall apart in March. From March 11th on, Twitter saw a 27 percent drop in year-over-year ad revenue. This led to Twitter missing out on $20 million to $80 million that it had initially expected to bring in by the end of the month, and the company ultimately posted its first loss since 2017.
The quarter can be seen as “two distinct periods,” Twitter writes: “January through early March, which largely performed as expected” and “early March through the end of the quarter, when the pandemic became global.” Twitter says the downturn “was particularly pronounced in the US.”
Twitter’s results are similar to those we’ve seen from other apps and web services: usage is up significantly as a result of people being stuck at home and looking for things to do, but there are signs that advertising could fall apart next quarter, leading to a serious drop in revenue.
For Twitter, the matter is even more serious — companies like Snap and Facebook still saw significant revenue growth, even with the slowdown. Twitter isn’t offering a projection on how it’ll do next quarter due to “unprecedented uncertainty and rapidly shifting market conditions.”
It could also threaten Dorsey’s position at the top. In March, days before the coronavirus was declared a pandemic, Twitter struck a deal with the activist investor firm Elliott Management that involved setting aggressive user growth and revenue targets. If Twitter fails to meet them, “Dorsey could still be replaced or investors could push for a sale of Twitter,” Bloomberg reported at the time.
User growth is headed in the right direction, but it seems unlikely at this point that Twitter can hit whatever advertising targets the company agreed to. Twitter now says it’s accelerating its work on advertising products, including one that lets companies promote mobile app downloads directly inside the Twitter feed.
Twitter usage spiked to 166 million daily users in the first quarter of 2020, as more people flocked to the site to keep up with news on the coronavirus pandemic. The usage growth is the largest Twitter has ever reported year-over-year, up from 134 million during this same quarter last…
