The increase in Twitter users in the long run overcomes the drop in advertising

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Brian Adam
Professional Blogger, V logger, traveler and explorer of new horizons.

The pandemic hurts Twitter’s finances today, but it brings good news for tomorrow. Boring consumers flocked to the $ 29 billion social network during the second quarter, looking for news on the protests, the Covid-19 and the upcoming US elections, the category Twitter calls “monetizable active daily users.” it climbed 34% year-on-year to 186 million during that period. That caused costs to rise. On the other hand, advertisers tightened their belts, so that revenues fell 19% compared to the same quarter of the previous year. The result has been an operating loss, but investors should not be overly concerned.

The reason is that Twitter’s long-term problem has always been attracting new followers. While Facebook registered 1.7 billion daily active users in March, the platform led by Jack Dorsey at the moment is little more than a tenth of that figure. We are not comparing two exactly the same things in this case, but the numbers help explain why Facebook’s market capitalization is more than 20 times greater than Twitter’s.

The Twitter service is often puzzling to new users, but it becomes addictive once they decide who they want to follow and are comfortable with the rapid flow of information, humor, insults, and gossip. Seen this way, the increase in users is a plus for the future of Dorsey’s business. This is, presumably, the reason why investors pushed the share price more than 5% last Thursday morning, bringing it closer to its 2020 maximum, reached in February before the pandemic broke out.

When the coronavirus impact dissolves, advertisers will spend again. Many of the new Twitter users will stay. Hacks like last week’s, activist campaigns, and debates about unwanted content will always bring a bit of drama, but in the long run, the rise in Twitter users will take over from the drop in ads.