According to Wallstreet analysts, the US-based microblogging platform Twitter will struggle to replicate a bumper 2020 dominated by the US political battles, civil strife, and the COVID-19 crisis as people venture out following vaccine rollouts.
Other digital ad firms such as Facebook Inc and Alphabet Inc’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. The social media ‘s shares dropped more than 12 percent after it posted first-quarter sales and user figures that were largely in line with analyst estimates, but warned that the current quarter could be its worse as it eyed a weaker 2021.
Mr. Haris Anwar, Senior Analyst at Investing.com stated that “the company’s weak future guidance suggests that repeating this performance will be extremely difficult,” adding that as vaccine rollouts ramp up, more people will seek out offline activities.
Even though other tech firms have predicted a decline in users this year, they remain optimistic about ad spending as marketers try to find customers willing to spend and travel after being stuck indoors for over a year.
Mr. Michael Nathanson, Senior Research Analyst at MoffetNathanson LLC remarked that “Twitter doesn’t seem well-positioned to capture the most dynamic 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.”
Twitter’s recent pledge to concentrate on new products and features did nothing to allay investor concerns.
However, some analysts believe the company’s current-quarter revenue outlook is conservative, as newer app features and the return of live events are expected to increase user interaction and monetization 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.
Of the 40 analysts covering the stock, 29 have a “hold” or lower rating while the remainder have a “buy” or higher rating. According to Refinitiv data, the stock’s current median price target is $70.