Categories Analysis, Technology

What do social media companies have in store for 2021?

Snap expects its daily active users to grow approx. 20% YoY in the first quarter of 2021 to reach 275 million

Social media companies, in general, witnessed higher usage during the COVID-19 pandemic in 2020 as people staying at home spent more time on social media sites to keep in touch with their families and to stay updated about the health crisis and other events. But what goes up must come down. After an unusual year, social media firms expect trends to normalize over the coming months. Let’s take a look at what 2021 has in store:

Usage trends

Through the four quarters of 2020, Facebook (NASDAQ: FB) witnessed a growth in its total daily active users (DAUs) and monthly active users (MAUs) on a sequential basis. The company ended the year with 1.84 billion DAUs and 2.80 billion MAUs.

The growth in daily and monthly active users remained relatively muted in regions like US & Canada and Europe with only a slight pickup in numbers in some of the quarters but places like Asia-Pacific and Rest of World witnessed healthy growth in user numbers. At the end of 2020, Facebook had 1.19 billion MAUs and 744 million DAUs in Asia-Pacific, making up the majority of its user base.

Twitter (NYSE: TWTR) saw sequential and year-over-year increases in its monetizable daily active usage (mDAU) throughout 2020, driven mainly by global conversations on COVID-19, the US elections and other events as well as by new features introduced to the platform. The company ended the year with average mDAU of 192 million, which was up 27% YoY and 3% sequentially.

mDAU in the US saw a meaningful uptick from the first quarter to the second quarter in 2020 but remained relatively unchanged through the remainder of the year. International mDAU also witnessed similar trends with a 14% spike in Q2 2020. In Q4, however, mDAU gained only 2% sequentially.

Snap Inc. (NYSE: SNAP) saw a steady sequential growth in average daily active users (DAUs) through the four quarters of 2020. DAUs stood at 265 million at the end of the year. While North America and Europe witnessed somewhat muted growth through the year, Rest of World saw quite a meaningful spike with a 39% growth from 71 million in the first quarter to 99 million in the fourth quarter.


Facebook had previously mentioned that it expects usage to normalize from the peak levels seen in early 2020. Consistent with this outlook, DAU in US & Canada fell 1 million sequentially during the fourth quarter of 2020. This trend is likely to continue through 2021 as vaccines are rolled out and things go back to normal.

Facebook has benefited from the shift to ecommerce and this trend is likely to benefit the company in the coming quarters. The company is, however, likely to face challenges to its advertising business from regulations related to data and privacy.  

Twitter expects the massive growth seen in its mDAU during 2020 to impact growth rates in 2021. In its most recent quarterly earnings report, the company said the increase in average absolute mDAU through the end of January was above the historical average from the last four years.

Twitter expects mDAU to increase around 20% year-over-year in the first quarter of 2021. The spike in usage witnessed last year is creating challenging comps and is likely to lead to quarterly growth rates in the low double digits on a YoY basis in the remaining three quarters of 2021. Twitter expects this to result in an average annual growth rate of approx. 20% from Q4 2019 to Q4 2021. The company expects total revenues to range between $940 million and $1.04 billion for the first quarter of 2021.

Snap expects its daily active users to grow approx. 20% YoY in the first quarter of 2021 to reach 275 million. Total revenues are expected to grow 56-60% to $720-740 million.

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