Twitter will struggle to replicate a bumper 2020 dominated by the United States political battles, civil unrest, and the COVID-19 crisis as people venture out following vaccine rollouts, Wall Road analysts said on Friday.
The lifting of restrictions as people get vaccinated has in large part seen benefiting other digital ad firms such as Facebook and Alphabet’s Google whose stocks soared after reporting blockbuster results this week.
Not so with Twitter. Shares sank more than 12 percent on Friday after the social media company reported first-quarter revenue and user numbers mostly in line with analyst estimates and warned the current quarter could be its worse as it eyed a weaker 2021.
“The company’s weak future guidance suggests that repeating this performance will be extremely difficult,” said Haris Anwar, senior analyst at Making an investment.com, adding that more people will look to engage in offline activities as the vaccine rollouts pick up.
Despite the fact that other tech companies have warned of a drop in users this year, they’re still upbeat on ad spending as marketers try to target consumers keen to spend and go back and forth after being locked indoors for over a year.
“Twitter doesn’t seem mannered positioned to in fact capture the most dynamic a part of the digital advertising economy as they lack both sufficient scale of users and the first party data signals that attract performance based marketers,” said Michael Nathanson, senior research analyst at MoffetNathanson.
A vow to concentrate on new products and features by Twitter did little to allay investor concerns on Friday.
On the other hand, some analysts found the company’s current-quarter revenue forecast conservative as they expect newer app features and return of live events to spice up user engagement and monetisation in coming months.
A minimum of eight brokerages cut their price targets on Twitter after the company forecast tepid revenue growth for the second one quarter.
Of the 40 analysts covering the inventory, 29 have a “hold” or lower rating and the rest have a “buy” or higher rating. The current median price target on the inventory is $70, as per Refinitiv data.
© Thomson Reuters 2021
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