Twitter revenue plummets as Elon Musk’s takeover bid spooks advertisers

Twitter has blamed the ongoing struggle to complete Elon Musk’s $44 billion acquisition and a flagging digital advertising market for a surprise decline in quarterly revenue and a net loss.

The results come as Twitter has sued Mr Musk for dropping his bid to buy the company and is now preparing for a legal showdown in a trial due to start in October. The deal’s uncertainty has worried Twitter’s advertisers and wreaked havoc at the company.

Ad revenue rose just 2 percent to $1.08 billion, according to Refinitiv IBES data, missing Wall Street’s expectations of $1.22 billion.

Total revenue for the second quarter, which includes subscription revenue, was $1.18 billion, compared to $1.19 billion a year earlier. Analysts had expected $1.32 billion.

“Twitter is now in the unenviable position of convincing advertisers that its ad business is solid, regardless of how the court battle with Musk ends, and its second-quarter results show the platform has a lot of work to do,” said Jasmine Enberg, senior analyst at research firm Insider Intelligence.

Twitter shares opened flat at $38.90 on Friday.

The company’s stock is dependent on the possible outcomes of the trial, and its financial metrics aren’t moving investors, said Dan Ives, an analyst at Wedbush Securities.

Twitter said its net loss was $270 million, or 35 cents a share, compared to a profit of $65.6 million, or 8 cents a share, a year earlier.

The adjusted loss of 8 cents missed expectations for an adjusted profit of 14 cents.

Monetizable daily active users, a metric closely watched by investors that measures users who see ads on Twitter, rose 16 percent to 237.8 million but fell short of analysts’ expectations of 238.7 million.

The San Francisco-based company said bot and spam accounts accounted for less than 5 percent of users in the quarter, a figure it has been repeating since 2013.

Mr Musk has cited the proportion of bot and spam accounts as a reason for his going out of business, and has accused Twitter of withholding information about the actual number of such accounts on the service.

Twitter said it would not provide financial advice, issue a shareholder letter or hold a conference call on the results, citing Mr Musk’s “pending acquisition”.

The company’s costs and expenses increased by 31 percent. Expenses related to the Mr. Musk deal totaled $33 million for the quarter, while severance costs were $19 million.

The social networking platform withdrew some job offers for new hires in May. CEO Parag Agrawal previously told employees the company needed to cut costs.

Inflationary pressures and recession fears this year have forced some advertisers to cut marketing budgets.

On Thursday, Snapchat parent company Snap reported weak revenue growth and declined to provide guidance, citing “incredibly challenging” conditions as advertisers cut spending. Twitter revenue plummets as Elon Musk’s takeover bid spooks advertisers

Fry Electronics Team

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