Twitter reports slump in revenue, blames uncertainty over Elon Musk deal

Twitter, in its news release, noted “advertising industry headwinds related to the macro environment as well as uncertainty related to Twitter’s pending acquisition.” The company will not host an earnings conference call due to the pending deal, which is suing Mr. Musk to complete it.

Twitter’s revenue fell to $1.18 billion from $1.19 billion last year, and was below the average analyst estimate of $1.32 billion in

set of facts.

Advertising revenue increased 2% from the previous year to $1.08 billion. In the first quarter, advertising revenue grew 23%.

Slowing ad revenue on Twitter suggests that the turmoil surrounding Mr Musk’s deal is irritating advertisers, said Youssef Scully, an analyst at Trust Securities. “Advertisers don’t even want to engage with Twitter until they know what’s going on,” he said. The company is “stuck in the middle of a nightmare”.

Elon Musk questioned Twitter user numbers.


picture:

Jim Watson/AFP/Getty Images

Twitter shares fell less than 1% in early trading Friday.

Mr Musk’s $54.20 per share bid for Twitter helped push up the company’s stock price amidst Sharp selling in technology stocks. Prior to Friday, Twitter’s stock price had fallen less than 10% so far this year, while the heavy Nasdaq Composite had lost more than 20%.

By comparison, Snap shares fell 35% in morning trading on Friday.

Twitter reported a loss of $270 million, or 35 cents a share, compared to last year’s profit of $65.6 million, or 8 cents a share. Excluding items such as stock-based compensation, the company reported an adjusted loss of 8 cents per share. Analysts, on average, were expecting adjusted earnings of 14 cents per share, FactSet shows.

The number of monetized daily active users on Twitter increased to 237.8 million from 229 million in the first quarter and 206 million last year. The number of users in the United States – which makes up the company’s largest market – grew to 41.5 million from 39.6 million in the first quarter and 37 million last year. The company said the increase was driven by product improvements and global conversations about current events.

When releasing its results in April, Twitter said it was withdrawing previous goals and expectations, and would not provide forward-looking guidance. Before courting Mr. Musk, Twitter had been working on three main goals by the end of 2023: to surpass $7.5 billion in annual revenue, reach 315 million daily users, and double the pace of its production of new technology.

Earlier this week, the Chief Justice of the Delaware Chancery Twitter’s request granted to expedite its lawsuit against Mr. Musk. A five-day trial is scheduled for October Despite the opposition of the billionaire’s lawyerwho argued that The trial must take place on or after February 13 next year.

Mr. Musk said the main reason for backing out of the deal was a lack of confidence in Twitter’s estimate that less than 5% of monetized daily active users are from spam or fake accounts. He said that estimate may be too low.

Twitter has said for years in its securities filings that the number of fake accounts and spam on its platform may be higher than its estimates. The company said in its lawsuit against Mr. Musk that Has buyer’s remorse Over the Fall in stock prices Since he agreed to the deal in April.

In a recent lawsuit, Mr Musk’s team said they became concerned about Twitter user numbers after the company disclosed in its filing. April earnings report It overestimated its user base for nearly three years to the end of 2021 due to an error in how it counts people linked to multiple accounts. The review reduced the number of monetized daily active users by 0.9% for the fourth quarter of last year.

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The lawsuit also said that Mr. Musk met with Twitter executives in May to discuss how the company measures spam and was “surprised to learn how small this process was” and noted the lack of automated tools to help with the account.

Elon Musk has established close ties with Beijing to build Tesla’s business in China. Now that it has bought Twitter and is focusing on free speech, The Wall Street Journal is looking at how China is using the social media platform to promote its views, and why it raises such concern. Image caption: Sharon Shee

write to Sarah E. Needleman at [email protected]

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