NEW YORK - Coronavirus has made Twitter a must-read. But advertisers are bailing, as the virus saps their budgets and fills the social network with the kind of content brands don’t exactly love appearing alongside. Twitter scrapped its revenue forecast for the quarter on Monday and said it would make an operating loss, but at the same time it said that user numbers had grown rapidly. On a net basis, that still leaves Twitter a loser.
The $19 billion company lead by Jack Dorsey is struggling to keep revenue coming in because the world is on pause. That’s an issue for all ad-dependent companies. Morgan Stanley estimates that internet advertising growth in the United States will decline 2% this year, after several years of double-digit increases.
Twitter has some unique challenges though. It looks and feels more like a news wire than its peers Facebook and Alphabet’s Google. That’s good for attracting people desperate for information. Twitter’s daily active users jumped more than 23% for the quarter thus far, meaning it is achieving the target it promised to activist fund Elliott Management and Silver Lake Partners in a deal it struck with the two earlier this month.
But news services don’t get to choose what sets the agenda, content-wise. As newspapers already know, brands are allergic to appearing next to bleak content on wars or pandemics. The New York Times, for instance, warned early that digital advertising for the quarter would fall 10%.
Meanwhile there’s no guarantee those extra users will stick around, which means the revenue and profit numbers are still the ones that matter most. Cable news audiences tend to fall after election cycles, for example. Twitter’s free-speech model has made it well-read and useful. That’s not always the best way to be predictably profitable.
- Twitter said on March 23 it was withdrawing its revenue and operating forecasts for the first quarter of this year because of the impact of Covid-19. The social network is also pulling its guidance for expenses, stock-based compensation, headcount and capital expenditures for the full year.
- Twitter expects revenue in the first quarter of 2020 to be down slightly year-over-year and said it would make an operating loss. Monetizable daily active users are up 23% quarter-to-date compared to the first quarter of 2019, to 164 million.
(Editing by John Foley and Amanda Gomez) ((email@example.com; Reuters Messaging: firstname.lastname@example.org))