Twitter Reports Loss As ‘Uncertainty’ Weighs On Business

Twitter reported a net loss of $270 million (£226m) for its April to June quarter, saying its business was affected by “uncertainty” around Elon Musk’s proposed bid to purchase the company — a deal he is currently attempting to back out of — as well as a slowdown in ad spending.

The figure contrasts to a profit of $66m for the same quarter a year ago.

At the same time its user base continued to grow, with daily active users expanding 16 percent year-on-year to 237.8 million during the quarter.

The company on Friday reported revenues of $1.18bn for the quarter, down 1 percent from the same quarter a year earlier.

Ad slowdown

Recession and inflation fears were causing some advertisers to reduce their advertising expenditures, Twitter said.

The company had once predicted a 20 percent pace of revenue growth for the year.

Musk, meanwhile, privately told investors he would quintuple the social media firm’s revenue by 2028 and expand it to 931 million users in the same year.

Amidst declines in the share price of Tesla, Musk’s principal source of financial assets, he decided to pull out of the acquisition and alleged it had an unacceptable proportion of fake accounts, something Twitter denies.

Court date

Twitter said its revenues fell 2 percent between the first and second quarter, roughly coinciding with the periods before and after Musk moved to acquire the firm.

Twitter said it spent $33m on the proposed deal during the quarter.

Last week a judge assigned Twitter an October court date for its lawsuit to force Musk to proceed with the deal, after Twitter requested expedited proceedings.

Musk said Twitter breached the agreement by failing to provide information regarding fake accounts.

‘Uncertainty’

“Twitter now has an acquirer who no longer wants it, it has a CEO and a board who want to get rid of it, and an employee base who is caught in the middle,” said Forrester research director Mike Proulx.

“None of this is good for Twitter.”

In its earnings statement Twitter said the disappointing results were caused by “advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk”.

The company’s stock was down about 2 percent in pre-market trading on Friday, but opened roughly flat.

Social media spotlight

By contrast, the stock price of Snapchat’s parent company Snap dropped more than 30 percent in early trading on Friday after it reported slower than expected reenue growth the previous day.

Twitter declined to provide a financial outlook for the upcoming quarter or to host an earnings call with analysts, citing the pending acquisition.