- Twitter Inc. gave a revenue forecast for the current quarter that may be short of analysts' estimates, indicating that the digital advertising service has not fully capitalized on the market driven economy amid the pandemic companies like Facebook Inc. and Google.The shares were increased in extended trading by about 8%.
The company said that its sales range from $980 million to $1.08 billion in the period ending in June, in a statement Thursday.According to Bloomberg data, analysts projected $1.05 billion on average.
Revenue increased to $1.04 billion in the three months ended March 31 -- an analyst's average estimate.
The digital advertising of Twitter stands in contrast to some of its competitors in marketing.This week, Google and Alphabet Inc. reported strong first-quarter revenues, capitalizing on businesses pushing commerce and travel that are expected to increase spending as pandemic lockdowns ease.Twitter is usually slower to revamp brand advertising following the busy holiday quarter.
Twitter also reported that the daily active users in the USA increased to 199 million, having been adding 7 million since the previous quarter.In February, the company estimated growth in the first quarter at 20% for the year since former US President Donald Trump was banned from the service.On April 6, President Donald Trump was removed from Twitter for repeated violations of company rules, and some analysts concerned that the former president's absence might harm the business.
After closing close at $65.09 in New York, the stock dropped to a low of $58.88.The shares have gained 20 per cent this year.
For much of the year, Twitter has been in the center of public discussion, in part because of the Trump ban and the scrutiny from the Congress over its role with other social media sites in policing user speech.The company is also working on various new products including popular chatrooms to compete with the audio startup Clubhouse, which could lead to more future revenue.
In the coming quarters, user growth will begin to slow down as Twitter compares itself to the boom of last year, caused by the global pandemic and a contentious U.S. elections.According to Twitter's shareholders letter, the company expects to increase users in the 'low double digits' percentages for the rest of 2021.These projections were previously announced in February.
The pandemic hasn’t slowed Twitter's hiring practices yet.The company now has 6,100 total employees, up 20% from a year ago.The surge in new employees has also increased the stock compensation of the company.From a range of $525 million to $575 million previously reported on Twitter, Twitter raised its annual compensation estimate by 2021 to $600 million.
Although the company is building subscription products to complement its advertising business, it hasn't mentioned any new plans or details in Thursday's shareholder letter.
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