Twitter blames Elon Musk for revenue decline
Twitter operated at a loss in the second quarter and suffered a decline in revenue from a year earlier, reflecting struggles that the company blamed partly on its stalled sale to billionaire Elon Musk.
Revenue over April-June dropped 1% to $1.18 billion, while the bottom line swung to a $270 million net loss from a year-earlier profit of $66 million, Twitter reported on Friday. The company incurred an operating loss of $344 million, compared with an operating profit of $30 million in the same period of last year.
Twitter has a history of rapid revenue growth, including a 37% surge in 2021. The second-quarter decline reflected “advertising industry headwinds associated with the macroenvironment, as well as uncertainty related to the pending acquisition of Twitter,” the social media giant said.
The quarterly results mark Twitter’s biggest underperformance ever relative to the expectations of stock analysts. Revenue fell 11% short of the average Wall Street estimate, according to CNBC. Excluding one-time costs and gains, the company reported a loss of 8 cents per share, only the second quarter in the red on that basis in Twitter’s history. Analysts had expected a per-share profit of 14 cents.
Twitter agreed to Musk’s $44 billion takeover offer for the company in April, but the Tesla CEO called off the deal earlier this month, alleging that the social media platform had underestimated the number of fake accounts included in its user figures. After being partly blamed for the company’s drop in revenue, he tweeted, “I’m rubber, they’re glue.”
I’m rubber, they’re glue— Elon Musk (@elonmusk) July 22, 2022
Twitter reiterated on Friday that the sale to Musk remains in effect and that it will press ahead with a lawsuit to force the South African-born billionaire to complete the acquisition.
Wall Street analyst Dan Ives of Wedbush Securities said he expects Twitter’s stock to continue trading based on investor expectations about the lawsuit against Musk and hopes for a settlement. The shares are currently about 26% lower than the agreed takeover price of $54.20 each.
Twitter claimed to have an average of 237.8 million “monetizable” users each day in the second quarter, up 17% from a year earlier. However, revenue from subscriptions and other non-advertising sources dropped 27% to $101 million.