Twitter, caught in a tough court battle as Elon Musk tried to cancel its $ 44 billion acquisition, became an advertiser’s destination and profits on Friday.
Social media companies reported revenue of $ 1.18 billion in the second quarter, down 1% year-on-year. This is far from the 20% growth pace that was once predicted for the year. As costs and costs increased, the company reported a net loss of $ 270 million. This was a significant decrease compared to last year’s $ 66 million profit in the same quarter.
Financial analysts expected revenue of about $ 1.3 billion. Twitter’s share price fell more than 2% in pre-market transactions.
According to the company, the number of active users per day who saw the ad was 237.8 million, an increase of nearly 17% over the previous year.
The slump in earnings reports could fuel Mr. Musk’s desire to close his deal to buy Twitter. Musk, who heads electric car maker Tesla, said he had agreed to buy Twitter in April and plans to keep it private. He personally told investors that by 2028 the company’s revenue could be quintupled and expanded to 9.31 million users in the same year.
Read more about Elon Musk and Twitter
But as the stock market shook and pulled down Tesla’s stake, his main source of wealth, Musk made increasingly harsh comments on Twitter. This month he moved to close his deal. Twitter has since sued him to complete the purchase and a five-day trial is scheduled for October at Delaware Chancery Court to rule the matter.
Mike Proulx, Forrester’s Research Director, said: “None of these are suitable for Twitter.”
Twitter said in its earnings announcement that the disappointing result was due to “the headwinds of the advertising industry related to the macro environment and the uncertainty associated with the pending acquisition of Twitter by Elon Musk’s affiliates.”
In recent months, Twitter and other social media companies have faced a dark advertising market. Concerns about the recession and the Ukrainian war are holding back advertising spending, which social media companies rely on for the majority of their revenue. On Thursday, Snapchat maker Snap reported that quarterly growth was the slowest ever and losses were widespread. This caused the stock price to plummet by 26% in after-hours trading.
Twitter faces further concerns from advertisers about the potential acquisition by Mr. Musk, who said he hates ads and wants to relax Twitter’s content moderation policy, which prevents ads from appearing with offensive content. doing.
Still, investors who believe the court will force Mr. Musk to buy Twitter at a suggested price of $ 54.20 per share will make him the owner of the company, why he’s worried about financial headwinds. Is almost nonexistent.
Rich Greenfield, co-founder of research firm LightShed Partners, said: “After all, if they sell the company for $ 54.20, it’s an Eron issue, not a market issue.”
Greenfield added that investors would only be concerned about Twitter’s earnings if the deal collapsed and the fundamentals of the company’s business regained its importance. “We know that if a transaction collapses completely, inventories will decrease,” he said. “But the question is,’How much?'”
Musk also accuses Twitter of misleading investors and underestimating fraudulent accounts on the platform. According to the company, these accounts account for less than 5% of active users on the platform and use experts to audit that number. Twitter repeated this number as follows: Friday filing..
As the battle with Mr. Musk unfolded, Twitter tried to avoid the spotlight. For the second quarter in a row, the company refused to hold a financial results briefing with Wall Street analysts, avoiding unpleasant questions about Mr. Musk’s business implications.
“The company is very quiet,” Greenfield said. “It’s been a few months since the investor talked to the company.”
Musk also faces business concerns in Tesla. Automakers reported on Wednesday that quarterly profits declined due to supply chain delays and the price of Bitcoin invested by the company.
