Twitter breaks tech’s blockbuster streak, shares fall on tepid outlook

Platform News: Twitter stock market and financial performance

Twitter Inc shares sank 9% in post-market trading yesterday as it offered tepid revenue guidance for the second quarter, warned of rising costs and expenses and said user growth could slow as the boost seen during the COVID-19 pandemic fizzles.

The controversial social media business posted revenues and user numbers mostly in line with analyst estimates in stark contrast to the better performing digital ad firms like Facebook and Alphabet’s.

It said it expected second quarter revenue between $980 million and $1.08 billion, lower than Wall Street estimates of $1.06 billion on average, according to IBES data from Refinitiv. It also said stock based compensation for new hires would be more than expected this year.

Twitter says it wants to reset after years of product stagnation, announcing in February bold goals to expand its user base, speed up new features for users, and double its revenue by 2023.

“The explosive growth that Twitter experienced during the pandemic is slowing rather rapidly in the aftermath of an eventful 2020 in which the microblogging site benefited immensely from the US elections and a pandemic-driven surge,” said Haris Anwar, senior analyst at

Ad revenue for the first quarter were $899 million, up 32% from the same period a year ago and beating analyst estimates of $890 million. Total revenue for the quarter was $1.04 billion, up 28% year-over-year and slightly higher than estimates of $1.03 billion.

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Google and Facebook, the top two largest digital advertising platforms, both blew past revenue expectations in their first quarters. Advertisers consider both to have more ad formats and better ad targeting capabilities than Twitter.

Twitter reported 199 million daily active users, up 20% year-over-year, compared to analysts’ estimates of 200 million, according to FactSet data.

The Silicon Valley company repeated its warning that growth of its monetizable daily active users (mDAU) – its term for daily users who can view ads – could reach “low double digits” in the next quarters, likely hitting a low point in Q2.


The company said in a letter to shareholders it was too early to understand the full impact of Apple Inc’s privacy policy change which began rolling out on Monday, but said its integration with a new ad measurement tool from Apple has increased the number of iOS devices it can target certain types of ads to by 30%.

Twitter pledged in February a goal to double its annual revenue to $7.5 billion in 2023 from $3.7 billion in 2020. Responding to criticism that was summed up by Chief Executive Officer Jack Dorsey this year as “we’re slow, we’re not innovative, and we’re not trusted,” the company has recently snapped up newsletter platform Revue and podcast company Breaker and teased a litany of new products.

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The company is also testing a live audio feature “Spaces” to compete with Clubhouse and has teased new ways for creators to make money on the site, from tipping to “super follows” where fans can pay for exclusive content.

Twitter, which banned the then sitting US Head of State, Donald Trump following the 6th of January Capitol building riot, remains in the spotlight over its content policies and algorithmic systems. Both Mr Dorsey and Twitter’s head of US public policy appeared in front of Congress in recent weeks as lawmakers mull changes to social media platforms’ liability protections.

Twitter said it expected total revenue to grow faster than expenses this year, assuming that the coronavirus is less of a factor and that it sees “modest impact” from Apple’s changes.

But it said in its outlook that stock-based compensation expenses for this year will amount to $600 million, up from its previous guidance of between $525 million to $575 million, as the company ramps up hiring. It forecast capital expenditures to be $900 million and $950 million for the full year.

Twitter said it expects headcount, as well as total costs and expenses, to increase at least 25% in 2021 on a year-over-year basis.


The issues with Twitter are potentially serious to its long-term viability. The issue is not just based on results. The issue is based on perception. Witter is now seen not as a space for public debate, but instead an echo chamber of tribal centre-left policy. The mantra that some commentators on the right of US politics regurgitate is “Go woke, go broke”. With engagement and sign-ups in decline, it may be true.

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However, when looking at the company as a whole, it no longer seems to innovate. Instead, it copies.

The company seems to have never really solved the value problem. It (seemingly) changes its marketing solutions to advertisers every 2-3 years. A cynic would suggest that this could be when the customer better understands the actual long-term ROI from the advertising spend.

The team at Platform Executive hope you have enjoyed this news article. Automatic translation from English to a growing list of languages via Google AI Cloud Translation. Initial reporting via our official content partners at Thomson Reuters. Reporting by Elizabeth Culliford and Sheila Dang in New York. Editing by Grant McC. Comment by Rob Phillips.

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