Lifting restrictions as people largely vaccinate has seen the benefit of other digital advertising companies such as Facebook and Alphabet’s Google, whose shares have soared after reporting huge results this week.
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Not so with Twitter. Shares plunged more than 12% on Friday after the social media company reported that first-quarter revenue and user numbers were mostly in line with analysts’ estimates and warned that the current quarter could be worse as it looks to weaker in 2021.
“The company’s weak future guidance indicates that replication of this performance will be extremely difficult,” said Harris Anwar, chief analyst at Investing.com, adding that more people will be looking to engage in offline activities as the vaccine begins rolling out.
Although other tech companies have warned of a drop in the number of users this year, they remain optimistic about ad spending as marketers try to target consumers eager to spend and travel after locked inside for more than a year.
“Twitter doesn’t seem to be well-positioned to capture the most dynamic part of the digital advertising economy as it lacks sufficient scale for users and first-party data signals to appeal to performance-based marketers,” said senior researcher Michael Nathanson. Analyst at MoffetNathanson LLC.
A pledge to focus on new products and features by Twitter did little to assuage investor fears on Friday.
However, some analysts found the company’s revenue forecast for the current quarter conservative because they anticipate newer app features and live events return to boost user engagement and monetization in the coming months.
At least eight brokerages cut their price targets on Twitter after the company forecast tepid revenue growth for the second quarter.
Of the 40 analysts who cover stocks, 29 have a “pending” or lower rating and the rest have a “buy” or higher rating. The current average target price per share is $ 70, according to Refinitiv data.