After the market closed on Monday, social network Twitter (NYSE:TWTR) joined a growing chorus of companies that have either reduced or withdrawn their guidance for the current quarter, citing the impact of COVID-19, or the coronavirus. Twitter withdrew its outlook for certain financial metrics for the first quarter of 2020. Management also provided an update on user growth.
Investors, of course, had already priced in some negative impact from the coronavirus outbreak on the tech company. As of Monday evening, Twitter stock had slid about 38% since Feb. 19 -- worse than the S&P 500's 34% decline during this timeframe.
Advertising revenue takes a hit
In its March 23 update, Twitter said it is withdrawing previously stated guidance for revenue, operating income, operating expenses, and capital expenditures, citing "the growing impact of COVID-19 on the global operating and economic environment and their effect on advertiser demand."
"Twitter had a strong start to the year before the effects of COVID-19 began spreading more broadly, including a successful Super Bowl and overall strength in the U.S.," explained Twitter CFO Ned Segal in the company's press release about its updated outlook. "The COVID-19 impact began in Asia, and as it unfolded into a global pandemic, it has impacted Twitter's advertising revenue globally more significantly in the last few weeks."
Management noted that the impact of the pandemic is difficult to estimate but said that "current visibility" suggests its first-quarter revenue will be "down slightly on a year-over-year basis." In addition, the company said it expects a GAAP operating loss for the period.
Previously, management had guided for total revenue to be between $825 million and $885 million, implying 5% to 12% revenue growth. Furthermore, Twitter had anticipated operating income during the period to be between $0 and $30 million.
A silver lining
But COVID-19 has also notably had an important positive impact on Twitter. The company is seeing accelerated growth in monetizable daily active users (mDAU), likely because of a combination of more internet usage as more people are staying at home and the usefulness of Twitter's social platform for discovering and discussing timely news. Quarter-to-date, Twitter's mDAU are about 164 million, up 23% year over year and 8% sequentially.
Even though the quarter hasn't ended yet, this year-over-year growth rate is already an acceleration from 21% growth in the fourth quarter of 2019. In fact, it marks the fifth quarter in a row of accelerating mDAU growth.