SOCIAL MEDIA

Twitter usage up, but advertising sales slow

Twitter is seeing a record number of users flock to its service amid the coronavirus pandemic, but the economic impact of the virus is also hurting advertising, the social media company’s main source of revenue.

Sales rose just 3 percent year-over-year in the first three months of 2020 amid a broad advertising pullback as companies cut spending.

From March 11 to the end of the quarter, sales were down 27 percent from a year earlier, and April shows a similar trajectory, the company said Thursday. The decline was particularly pronounced in the United States, Twitter’s most valuable market.

The social media company reported revenue of $808 million in the first quarter, ahead of Wall Street estimates of $773 million, according to data compiled by Bloomberg.

Like other social platforms, including Snap and Facebook, Twitter is showing that for the first time, an increase in users doesn’t correlate to a similar rise in ad revenue. Twitter now has 166 million daily users, up from 152 million at the end of 2019, and 24 percent higher than a year earlier. That’s the fastest growth since the company started reporting the metric in 2016.

Twitter credited the gains to “typical seasonal strength, ongoing product improvements, and global conversation related to the COVID-19 pandemic.”

Facebook reported a similar take on Wednesday, warning of the “potential for an even more severe advertising industry contraction.”

Twitter said Thursday that improving its ad products is now the company’s “top priority” and that direct response ads are at the top of the list.

— Bloomberg News

ENERGY

Saudi oil tankers will add to port congestion

A fleet of supertankers carrying Saudi oil will add to the growing congestion at U.S. ports in coming weeks at the same time producers are shutting in output as they run out of space to store unwanted supplies.

A total of 43 million barrels of Saudi oil is set to arrive on the U.S. Gulf and West coasts by May 24, according to Rystad Energy. The flotilla — comprising 28 tankers, including 14 very large crude carriers, or VLCCs — will join a queue of 76 tankers waiting to unload in U.S. ports as the greatest oil glut in history plays out.

Dozens of tankers are lined up off the two coasts, with demand for motor and jet fuel destroyed by the coronavirus pandemic. There are 34 tankers already waiting in line to offload about 25 million barrels on the West Coast, and 31 tankers are lined up off the Gulf Coast.

“The congestion at U.S. ports has reached new highs,” Paola Rodriguez-Masiu, Rystad Energy’s senior oil markets analyst, said in a statement. “We find it unlikely that all tankers will be able to unload upon arrival.”

President Trump has come under pressure from Republican senators to stop the tankers hauling Saudi oil from unloading and adding to a domestic glut spurred by the pandemic. However, refiners countered that some U.S. plants are configured to run on the type of medium and heavy sour crude that’s typically imported from Saudi Arabia.

— Bloomberg News

AIRLINE INDUSTRY

American Airlines loses over $2 billion

American Airlines lost $2.2 billion in the first quarter as the coronavirus pandemic triggered a sharp drop in air travel, and the airline is taking steps to survive but as a smaller carrier.

American disclosed Thursday that revenue fell 19 percent while costs continued to rise even as the virus spread.

The situation facing the airline industry has grown more dire since the first quarter ended, as air travel in the United States during April remained down 95 percent from a year ago, judging by the number of people screened at the nation’s airports.

“Never before has our airline, or our industry, faced such a significant challenge,” Chairman and CEO Doug Parker said.

The Fort Worth, Tex.-based airline has cut its flying schedule by 80 percent in April and May and 70 percent in June. It has grounded hundreds of planes, retiring some permanently.

“We’re going to be somewhat smaller than we intended to be” a year from now, Parker said in an interview. “Because we’re going to need to be smaller, we’re going to need to do something with the number of employees we have.”

American began the year with more than 133,000 employees. About 4,500 workers have taken early retirement, and about another 34,000 have accepted partially paid leave for three to 12 months, or fewer hours of work. Some of those taking leave couldn’t find child care.

Under the terms of federal aid they accepted, American and other U.S. airlines can’t lay off workers until October. Parker said he thinks he can avoid layoffs after that.

— Associated Press

Also in Business

Chicken demand from U.S. quick-service restaurants has bounced back to near where it was before the coronavirus outbreak caused consumers to isolate at home, poultry company Pilgrim's Pride said Thursday. Restaurant demand for meat and poultry tumbled as the pandemic shut dining rooms, shifting sales to grocers. The recovery signals some consumers are resuming more normal activities.

Wells Fargo said Thursday it will temporarily stop accepting applications for home equity loans given the economic uncertainty fueled by the coronavirus pandemic. Banks have been making moves to tighten credit quality in response to the outbreak, which has threatened to plunge the global economy into a deep recession.

Coming Today

10 a.m.: Institute for Supply Management releases manufacturing index for April.

10 a.m.: Commerce Department releases construction spending for March.

Earnings: ExxonMobil.

— From news services