The Impact of COVID-19 Pandemic on the Social Media Industry: A Long-term Perspective

Abstract

With the emergence of the coronavirus pandemic around the world, social media has rapidly become an effective tool for information generation and broadcast, entertainment, marketing, and consumption. Depending on some studies, social distancing rules, lockdown measures, business closures, self-quarantines, and the fear of infection during the COVID-19 pandemic limited people's physical social interaction; as a result, individual and organizational activities on social media platforms grow explosively. This degree of social media popularity has a double-edged impact on the expansion and financial performance of social media companies. In this article, a well-known American corporation, Twitter, lnc. was chosen and daily stock data from January 2020 to April 2022 is extracted, as well as corresponding daily new confirmed cases in the US and around the world. The VAR model was applied in the study to evaluate the link between variables, and the ARMA-GARCH model was used to determine and analyze both earning ability and stock volatility throughout the pandemic. Interestingly, Twitter's financial performance is merely a microcosm of the entire stock market, in which investors can quickly rebound from pessimism and reinvest in the market. The study forecasts the possible future of the social media industry and provides managerial and investment recommendations to its stakeholders.