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The
social media company said in April that it had sped up work on
long-sought tools to attract advertisers, particularly mobile
games and other app makers that are continuing to target
consumers stuck at home during the COVID-19 pandemic.
Months later, Twitter remains reliant on advertising targeted
around big events, which have all but vanished during the
pandemic, and it lacks the "direct response" ad products
preferred by app developers at the level offered by peers.
Wall Street is bracing for Twitter to take a harder hit in the
second quarter than other ad-dependent social media competitors
like Facebook <FB.O>, which is expected to turn a profit despite
coronavirus pressures.
Analysts estimate on average that Twitter's ad sales will
decline 19.8% in the second quarter year-over-year, according to
Refinitiv data. They expect a loss of nearly $126 million,
blowing past the $8 million loss posted in the first quarter.
"Twitter's ad business was hit hard by the coronavirus pandemic
in March, and it's likely that losses continued into at least
part of Q2," said eMarketer analyst Jasmine Enberg.
The company had aimed to stem losses this year by slashing
costs, although the hack may spoil that plan if it forces costly
security investments. Last week, Moody's warned the incident
raised concerns about Twitter's internal security and possible
reputational risks for users.
That could bode ill for Chief Executive Jack Dorsey, who fought
off an attempt by activist investor Elliott Management to oust
him from his job earlier this year by agreeing to growth
targets. The deal bought time for Dorsey, who is also CEO of
financial tech company Square <SQ.N>, to show Elliott he could
run two public companies.
Earlier this month, Twitter signaled that new revenue-generating
products were on the way. It revealed via a job listing that it
had convened a team, code-named Gryphon, to work on building a
subscription platform.
It also announced plans to launch a new Application Programming
Interface (API), a potential boon to the company's data
licensing business, which contributes about 15% of its revenue
and is growing at a faster clip than ad sales. But Twitter
postponed the API's launch after the hack, saying the timing "no
longer made sense or felt right."
(Reporting by Katie Paul; Editing by Leslie Adler)
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