Twitter Suffers Poor Sales Amid Takeover Battle With Elon Musk
Twitter Suffers Poor Sales Amid Takeover Battle With Elon Musk
On Friday, Twitter released poor second-quarter revenue figures, dealing yet another setback to a business already engaged in a public court spat with Elon Musk over the future of the social network.
Revenue decreased 1% in the quarter compared to the same period year, marking the first annual loss since the pandemic’s peak in 2020. Sales for the quarter came to $1.18 billion, behind the $1.32 billion experts had predicted. The company attributed the unsatisfactory results to “headwinds in the advertising market relating to the macroenvironment as well as uncertainty related to the imminent acquisition of Twitter.”
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As predicted by analysts, Twitter gained 8.8 million new users throughout the quarter.
Given the uncertainty surrounding the company’s future, it’s unclear how much Friday’s earnings announcement will actually mean to investors. Up until two weeks ago, Twitter’s financial reports were merely a formality as it awaited the closing of the deal to sell the firm to Musk for $54.20 per share.
Twitter Suffers Poor Sales Amid Takeover Battle With Elon Musk
On July 8, Musk made an attempt to back out of the agreement, alleging Twitter had been secretive about the number of phony accounts that were proliferating on the platform. Musk has consistently disputed Twitter’s assertion that fraudulent or spam accounts make up fewer than 5% of its total user base, which Twitter reiterated in its earnings announcement on Friday.
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Both parties are getting ready for a trial that should take place in October and in which Twitter will urge a judge to order the CEO of Tesla Inc. to uphold his acquisition agreement to acquire the business for about $44 billion.
After Musk’s announcement, Truist Securities analyst Youssef Squali noted that “this makes the investment case for Twitter impossible to build at this point.” If the sale falls through, Truist predicted that the shares may price “in the high $20s.”
Twitter’s operations may suffer if the purchase does not go through. The business had previously set a target of 315 million daily users and $7.5 billion in yearly sales by the end of 2023. Twitter is currently falling short of the user target.
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Twitter Suffers Poor Sales Amid Takeover Battle With Elon Musk
Twitter is contending with a significant decline in advertiser revenue and escalating competition from TikTok for viewers, similar to many of its social media competitors. When Snap Inc. posted disappointing sales on Thursday, the company hinted to the challenges facing the sector. It cited advertisers’ higher-than-anticipated budget cuts due to the unrest in the global economy as well as heightened competition for scarce marketing funds.
In New York’s premarket trade, Twitter shares plummeted 2.2 percent as Snap’s results further damaged the stock. They have decreased by roughly 9% so far this year.
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Twitter’s net loss for the quarter was $270 million, or a loss of 35 cents per share. In comparison, the same period a year prior had net profits of $66 million and earnings per share of 8 cents.
In contrast to its customary shareholder letter, Twitter did not host an analyst call to discuss its financial results and instead issued a brief press statement with little information. Twitter retracted its former outlook and declared it would no longer offer forward-looking information in its most recent quarterly results, released in April.
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