Elon Musk Twitter: Twitter blames Elon Musk and weak advertising market for falling revenue

Twitter Inc on Friday blamed the ongoing struggle to complete the $44 billion acquisition. Elon Musk and a weakening digital advertising market due to an unexpected drop in quarterly revenue and a net loss.

The results come after Twitter sued Musk for turning down an offer to buy the company, and is now preparing for a trial due to begin in October. The deal’s uncertainty has worried Twitter advertisers and caused chaos within the company.

Advertising revenue rose just 2% to $1.08 billion, falling short of Wall Street’s expectations of $1.22 billion, according to Refinitiv IBES data.

Total second-quarter revenue, which also includes subscription revenue, was $1.18 billion, up from $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 sustainable, no matter how its legal battle with Musk ends, and its second-quarter earnings show the platform has gone to great lengths to do just that.” Jasmine Enberg said. , chief analyst at research firm Insider Intelligence.

Twitter shares opened a flat at $38.90 on Friday.

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The company’s shares are dependent on the potential outcome of the litigation, and its finances are not moving the needle for investors, said Dan Ives, an analyst at Wedbush Securities.

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

Its adjusted loss of 8 cents fell short of expectations for an adjusted profit of 14 cents.

Monetized daily active users, a metric closely watched by investors that measures the number of users who view ads on Twitter, rose 16% 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% of users during the quarter, a figure that has been repeated since 2013.

Musk seized on the share of bots and spam accounts as a reason for pulling out of the deal, accusing Twitter of hiding the true number of such accounts on the service.

Twitter said it would not provide financial advice, publish shareholder letters or hold a profit conference call, citing Musk’s “pending acquisition”.

The company’s costs and expenses jumped 31%. Musk-related expenses for the quarter were $33 million and severance pay expenses were $19 million.

The social media platform canceled some job offers for new hires in May. CEO Parag Agrawal has previously told employees the company needs to cut costs.

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

On Thursday, Snapchat’s parent company, Snap Inc, reported weak revenue growth and declined to make a forecast, citing “incredibly difficult” conditions as advertisers cut costs.

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