Twitter's Ambitious Growth Targets for 2023

Prior to its scheduled 2021 virtual investor day, Twitter unveiled its three primary long-term objectives. These focus on expanding its user base, increasing revenue, and accelerating the release of new features across its platform.

Revenue and User Growth Goals

The company articulated a goal to, at a minimum, double its annual revenue. Specifically, Twitter aims to increase revenue from $3.7 billion in 2020 to $7.5 billion or higher by 2023. Furthermore, it anticipates achieving at least 315 million mDAUs – Twitter’s proprietary metric representing “monetizable” daily active users – by the final quarter of 2023.

This projected growth represents a compound annual growth rate of approximately 20% when compared to the 152 million mDAUs reported in the fourth quarter of 2019, as detailed in a recent SEC filing.

Challenges in User Acquisition

Historically, active user growth has presented a challenge for Twitter. Growth has often been incremental, or even stagnated at times. For example, the fourth quarter of 2020 saw 192 million mDAUs, falling short of the anticipated 193.5 million.

Investors have become accustomed to Twitter’s tendency to fall short of user growth expectations. This has, at times, led to the creation of unique user metrics designed to mask declines in monthly user growth.

Accelerated Feature Development

Twitter’s long-term strategy suggests a belief in its ability to deliver substantial user growth, potentially fueled by investments in new functionalities. The company intends to “double development velocity by the end of 2023.”

This means a doubling of the number of features released per employee, with a focus on those that directly contribute to either mDAU or revenue generation.

Recent Feature Launches and Acquisitions

Twitter has demonstrated considerable activity in feature development in recent months. The “stories” feature, known as Fleets, was launched globally late last year.

Currently, the platform is testing several new features, including:

• Twitter Spaces, a competitor to Clubhouse
• Birdwatch, a community-driven initiative to combat misinformation

Additionally, Twitter acquired Revue, a newsletter platform now integrated into the Twitter website. Several smaller acquisitions, such as Squad, Chroma Labs, and Breaker, have been made to bolster product development teams.

Diversifying Revenue Streams

While new features may stimulate increased platform usage, revenue growth will also depend on diversifying beyond traditional advertising. Twitter has repeatedly discussed plans to introduce a subscription product, initially slated for launch in 2021, though its immediate impact on revenue is not expected to be significant.

The company is also exploring other monetization avenues, including tipping mechanisms and various paid features for consumers.

Focus on Advertising and Market Share

Twitter publicly stated its plan to achieve the $7.5 billion revenue target by “growing our audience and gaining advertising market share in both brand and direct response.” However, the company did not elaborate on its subscription plans.

Investor Response

The market has reacted positively to Twitter’s announcements. As of this writing, Twitter stock has increased by nearly 7%.