X

This is not a paywall.

Register for free to continue reading.

We made a promise to you that we’ll never erect a paywall and we intend to keep that promise. We also want to continually improve your reading experience and you can help us do that by registering with us. It’s quick, easy and will cost you nothing.



Nearly there! Create a password to finish up registering with us:


Please enter your password or get a login link if you’ve forgotten


Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

Twitter Sales Miss Estimates Amid Takeover Battle With...

Business Maverick

Business Maverick

Twitter Sales Miss Estimates Amid Takeover Battle With Musk

Image: Geralt / Pixabay
By Bloomberg
22 Jul 2022 0

Twitter Inc. reported disappointing second-quarter sales on Friday, another blow to a company that is already fighting a high-profile legal battle with Elon Musk over the fate of the social network. 

Revenue fell 1% in the quarter from a year earlier, its first annual decline since the middle of the pandemic in 2020. Sales totaled $1.18 billion in the quarter, which fell short of the $1.32 billion analysts estimated. The company said “advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter” were factors in the disappointing results.

Twitter added 8.8 million new users during the quarter, in line with analysts’ estimates.

It’s unclear how much Friday’s earnings report truly means to investors while the company’s fate remains in limbo. Until two weeks ago, Twitter was set to sell the company to Musk for $54.20 per share, making its financial reports little more than a formality as it awaited the deal to close.

But Musk tried to back out of the deal on July 8, claiming Twitter hasn’t been forthcoming with information on the number of fake accounts running rampant on the site. Twitter reiterated in its earnings release on Friday that it believes false or spam accounts make up less than 5% of its total user base, a claim that Musk has repeatedly questioned.

Both sides are preparing for a trial, expected in October, during which Twitter will ask a judge to force the Tesla Inc. chief executive officer to honor his purchase agreement to buy the company for roughly $44 billion.

“This makes the investment case for Twitter hard to make at this point,” wrote Truist Securities analyst Youssef Squali after Musk’s announcement. Truist estimated that the shares could trade “in the high $20s” if the deal falls through.

If the deal does fall through, Twitter’s business could be in trouble. The company previously set a goal to reach 315 million daily users by the end of 2023 and boost revenue to $7.5 billion annually by the same period. Currently, Twitter isn’t on track to meet the user goal. It reported 237.8 million average monetizable daily active users in the second quarter.

Twitter revenue slows first time since 2020

Like many of its social media peers, Twitter is also facing a major slowdown in advertiser spending and increasing competition from TikTok for viewers. Snap Inc. foreshadowed the difficulties in the industry on Thursday when it reported disappointing sales, citing advertisers slashing budgets more than expected due to the global economic uncertainty, but also increased competition for dwindling marketing dollars.

Twitter shares, which fell initially after Snap’s results, were little changed at $39.68 Friday morning in New York. They are down almost 9% this year.

Twitter’s net loss was $270 million in the quarter, or a loss of 35 cents a share. That compares with net income of $66 million and earnings per share of 8 cents in the same period a year earlier.

Twitter isn’t holding an analyst call to discuss earnings, and only published a short press release with minimal detail compared with its usual shareholder letter. In the previous quarterly results in April, Twitter withdrew its earlier outlook and said it wouldn’t provide forward-looking guidance.


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted