Twitter released quarterly results on Friday that were below expectations. The social network attributed this failure in part to the uncertainty surrounding its potential takeover by Elon Musk. The group, which is trying to get the entrepreneur to keep his promise in court, saw its sales fall in one year (-1%) to $1.18 billion.
It also fell into the red with a net loss of $270 million, according to a statement released on Friday. Reported per share, an indicator closely followed by Wall Street, the loss is nearly three times what analysts were expecting.
“Twitter is a boat in the wind”
That drop is attributed to “headwinds” in the advertising industry, fears weighing on the economy, but also “uncertainty surrounding the ongoing acquisition of Twitter” by Elon Musk. “Twitter is in a rowboat in the middle of a storm,” commented Insider Intelligence analyst Jasmine Enberg, who recalled that the group was “accustomed to poor performance.”
In an environment of tightening credit conditions and an economic slowdown, companies whose model is entirely based on advertising are suffering from shrinking advertising budgets.
Snap in bad condition
On Thursday, Snap opened the social media ball, posting a bigger-than-expected loss and below-expected sales, causing it to shed more than 39% in the stock market in Friday’s session alone.
On the Twitter page, analysts nevertheless welcomed the increase of 8.8 million in the number of daily active users, who are described as “monetizable”, ie exposed to advertising on the platform, to a total of 237,800,000.
“It’s better than we feared and the numbers remain relatively strong given the current environment,” Wedbush Securities’ Dan Ives said in a statement. “Compared to Snap’s nightmare, we see the ad hasn’t collapsed,” the analyst added. Bucking the flow of other social networks that rolled public on Friday, Twitter action rose 0.81%.
A trial arranged in October
Aside from an unfavorable economic situation for the entire industry, Twitter is also weakened by the saga of its hypothetical takeover by Elon Musk. After the contractor’s resignation, in early July, the file moved to the legal arena, where those responsible want to ensure that the billionaire is forced to acquire Twitter.
On Tuesday, a judge of a specialized court in Delaware (Northeast), in October. The judge complied with Twitter’s call for an expedited trial to limit the damage this saga does to the company, while rejecting arguments by Elon Musk’s lawyers that debates would not open until 2023.
The businessman accuses those responsible for Twitter of lying about the proportion of automated accounts and spam on the platform and not providing him with enough data for verification. The group has denied the blue bird those claims, accusing Elon Musk of using them to create a distraction.
An advantage in the face of justice?
“The results (released on Friday) provide additional evidence that Elon (Musk) had an adverse impact on the company’s fundamentals, which should strengthen Twitter’s position in court,” CFRA Research’s Angelo Zino said in a statement. Many investors believe that Twitter has regained control, which has allowed the stock price to recover.
It is now above its April 4 price, the day before Elon Musk’s equity investment announcement, the first step ahead of an offer for the entire company ten days later.
However, the social network is “now in the unenviable position of having to convince advertisers of the solidity of its advertising business, regardless of the outcome of the legal dispute with Musk,” Enberg said. As with the publication of the first quarter, Twitter did not hold the traditional conference call to present the results on Friday.
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