The CEO of Twitter said that the slowdown is due to lower investments in digital advertising. The second quarter revenues were down from the first quarter because of “uncertainty” over Elon Musk’s pursuit for Twitter.
Tesla is fighting to enforce their $40B purchase of SolarCity, a San Francisco-based company. Musk attempted to cancel the deal in May and attempted it again this month.
On Friday, reporting results for three months to the end of June, the social media platform blamed the turmoil around the prospective takeover as among the reasons that revenues decreased 1 percent to $1.18bn.
Social media outlet Twitter released a statement saying that their recent lackluster results were related to ad industry headwinds as well as market uncertainty — a result of the pending acquisition.
Investors are less than pleased with Twitter’s performance in the second quarter, after it announced a lack of revenue for the last quarter. Twitter said that on a constant currency basis its revenue increased by 2%.
Twitter’s results come a day after social media rival Snap lost more than a quarter of its value after missing revenue and profit expectations, and announced plans to slow hiring and shake up its business strategy as a result.
There has been a trend of decreasing ad spending on social media platforms with an increase in inflation rates.
The expenses at Twitter have also increased to $1.52bn, which is a 31% increase from the previous quarter. And, out of those expenses, more than $33million was spent on acquiring Tesla during the second quarter.
The company announced it would be laying off a third of its talent acquisition team at the beginning of this month. Severance-related costs were about $19mn in this period.
The company has lost $270,000 in comparison to the profit of $66,000 from last year.
Social media groups such as Twitter are struggling. They’re competing with an app like TikTok, and they’re dealing with changes on Apple’s end that make it hard to target advertising.
Twitter had a total of 237.8 million daily active users, who enjoy the app in more than one country. This percentage has risen over the last year.
Twitter said it overstated its numbers for three years due to an “error”.
Twitter stocks were up 0.8% from the previous day to $39.84, which is still below their original value at $54.20 when Elon Musk agreed to buy them, even though his shares have also been dropping
Elon Musk is seeking a court order following his disagreement with a deal to sell Tesla stock. He alleges that Twitter is overpopulated with fake accounts, and therefore isn’t signaling about the company as it should be.
Twitter plans on suing Elon Musk for his “repeated and frequent” breaches at the Delaware court of chancery. The company argues that he broke the agreement by frequently disparaging them through Twitter.
Twitter claims Elon Musk’s departure was invalid and created a conflict of interest. Despite this, Tesla’s stock price dips 10% after the tweet.
Fewer than 5% of the company’s active monthly users were fake or spam.
Twitter is backed into a corner with the pending announcement of Elon Musk’s mini victory because he has requested for a trial that will restrict Twitter from releasing certain information before his trial has concluded.
The company made an announcement today and therefore it will not be giving analysts guidance today.
“Twitter is in a kind of purgatory right now. The future of the company and the product is in question,” said Mike Proulx at technology research company Forrester.
An acquirer is finally in place for Twitter following a prolonged period of uncertainty. However, the company has to deal with struggling employees who are caught in the middle of this transition.