Twitter reports a revenue drop, citing uncertainty over Musk deal and the economy
Twitter lost $270 million in the quarter that ended in June and fell short of revenue expectations for the second quarter in a row, the social network reported Friday. The company cited uncertainty surrounding Elon Musk's acquisition and advertisers nervous about the economy.
One bright spot in the social networking platform's report, however, was the number of users — an increase of nearly 9 million. Twitter attributed the growth to product improvements and global interest in current events. It also added users the previous quarter.
For the second quarter in a row, the company did not hold its usual conference call with analysts, citing the pending deal with Tesla CEO Musk.
Twitter's unexpected 1% decline in revenue to $1.18 billion came as ad-supported businesses are feeling squeezed by inflation, rising interest rates and the war in Ukraine — all of which have led companies to slash their advertising budgets.
The maker of the social network Snapchat similarly announced disappointing second-quarter results on Thursday. Snap sales grew at the slowest pace since it became a public company five years ago and its losses widened. Its shares fell 37% on Friday. Other tech stocks including Pinterest, Google, and Facebook owner Meta were also lower as investors worried about their exposure to the weaker ad market.
Twitter shares were little changed, however, in a sign that investors think a court may compel Musk to complete his purchase of the company.
This year has been a wild one for Twitter. In late April, Musk made an unsolicited offer to buy the company for $54.20 a share. That was 38% more than what Twitter's stock was valued at the day before Musk revealed his stake in the company at the beginning of April, and well above the current share price.
After a back and forth between Musk and Twitter's board, they struck a deal less than two weeks after Musk first announced he wanted to buy the company. Under it, he'd pay about $44 billion.
But since then, Musk has publicly shared his concerns about the prevalence of spam and fake accounts on the platform. Earlier this month he made it official: he was breaking off the deal.
Twitter quickly sued Musk to force him to abide by the legal agreement he signed. The company argues that the billionaire's concerns about bots are pretext to cover a change of heart that came as the economy has worsened.
The trial is set for October.
During a court hearing earlier this week, Twitter lawyer Bill Savitt argued that the uncertainty hanging over the deal "inflicts harm on Twitter every hour of every day."
Twitter expects to hold a shareholder vote on the deal later this summer.
Other major tech companies, including Meta, Google and Apple, announce their quarterly earnings next week.
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