Are Twitter and Netflix Taking a Hit for Overperforming in New Subscribers Early in the Pandemic?
Aside from the fact they’re both tech giants based in the San Francisco Bay area, Twitter and Netflix don’t have a ton in common. But Twitter’s fourth quarter earnings report on Tuesday revealed the two companies have both been impacted by what Netflix has previously called the “pull-forward effect.” When the coronavirus pandemic first hit, it accelerated user adoption of certain services — in essence, pulling forward demand so they nabbed more subscribers than expected early on. That led to some financial quarters with turbo-charged user growth early in the pandemic, with millions of people deciding to add certain apps to stay entertained while sitting inside all day. The tradeoff, though, is that user growth in future quarters may be underwhelming, since people signed up earlier than expected. This clearly impacted Twitter during the second half of 2020. Twitter on Tuesday said it added 5 million daily active users (DAUs) during Q4, bringing the company to 192 million DAUs overall, but falling short of the 6 million users Wall Street had expected during the holiday quarter. That was coming off a lackluster Q3 for Twitter, when the company added only 1 million daily users and also failed to meet analysts’...
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