Twitter blames Musk and ad market for revenue drop
Twitter had a disappointing second quarter, falling short of expectations in revenue, earnings and user growth.
The social media company's revenue for the period was $1.18bn, a 1pc decrease year on year and below analyst expectations of $1.32bn. This marks Twitter's biggest revenue miss to date, according to CNBC.
Twitter said the revenue drop reflects “advertising industry headwinds” due to macroeconomic factors. Social media player Snap shared bleak second-quarter results this week and also blamed macroeconomic issues impacting ad sales.
Twitter said the revenue result was also due to “uncertainty” regarding the acquisition of the company by billionaire Elon Musk, who recently said he was backing out of the $44bn deal.
Twitter reported a net loss of $270m, which is a striking difference to the net income of $66m in the same period last year.
The company's costs and expenses rose by 31pc, reaching $1.52bn. Twitter said that the costs related to the acquisition deal with Musk were around $33m for this period.
Twitter's monetisable daily active users reached 237.8m in the second quarter. This was a 16.6pc increase on the same period last year, but fell slightly short of analyst expectations.
Twitter is ‘in a kind of purgatory'
Speaking on the back of Twitter's results, Forrester VP and research director Mike Proulx said the company is “in a kind of purgatory” and its future is “in question”.
“Twitter now has an acquirer who no longer wants it, a CEO and board who wants to get rid of it, and an employee base whose caught in the middle of it all as their morale plummets.” Proulx added.
“The real victim from all of this drama is Twitter itself.”
Due to the pending acquisition, Twitter will not host an earnings conference call, issue a shareholder letter or provide financial guidance on the latest quarterly results.
The company is now taking legal action against Musk to see that he follows through on the deal.
The lawsuit is due to be heard in October, a US judge ruled earlier this week. This marked a win for Twitter, as Musk's legal team was pushing for the trial to begin next year.