Musk was reportedly named to Twitter’s board on Saturday, but the world’s richest man informed the company the same day that he would not, in fact, serve on the board.
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Twitter released second-quarter results on Friday that missed analysts’ estimates for profit, revenue and user growth.
Shares of Twitter fell 2% in premarket trading.
Here are the key numbers:
- Earnings per share: A loss of 8 cents, adjusted, against an expected profit of 14 cents, according to a Refinitiv survey of analysts
- Revenue: $1.18 billion vs. $1.32 billion
- Monetizable Daily Active Users (mDAUs): 237.8 million vs. 238.08 million expected, according to Refinitiv
Twitter said revenue fell 1% year over year to $1.18 billion. Wall Street expected $1.32 billion, or 10.5% year-over-year growth. This is Twitter’s biggest revenue loss ever, with results falling 11% from estimates, according to Refinitiv.
The company blamed the drop in revenue in part on advertising industry headwinds related to the broader difficult macroeconomic environment, as well as “uncertainty related to the impending acquisition of Twitter by an Elon subsidiary. Musk”.
Twitter and other ad-heavy social media companies have felt the brunt of macroeconomic challenges, as fears over inflation, interest rate issues, ongoing supply chain issues and war in Ukraine led some advertisers and brands to adjust their advertising spend. On Thursday, Snap reported disappointing second-quarter results and said it planned to slow hiring due to weakening revenue growth, causing its shares to plunge 25% in extended trading.
Given Musk’s impending acquisition, Twitter said it would not provide third-quarter forward guidance. Nor is he hosting a conference call with analysts to discuss earnings results.
Costs and expenses in the quarter increased 31% year-on-year to $1.52 billion. The company posted a loss of 8 cents per share, posting its first adjusted loss in two years and the second in its history.
Twitter said costs related to the Musk acquisition were about $33 million in the second quarter. Severance costs were approximately $19 million in the second quarter. Earlier this month, Twitter laid off a third of its talent acquisition team, according to the Wall Street Journal.
Twitter is embroiled in a legal battle with Musk over his proposed $44 billion acquisition of the company. Tesla’s CEO tried to pull out of the deal. Musk says Twitter underestimated the number of spam and fraud accounts and failed to provide information on fake accounts. Twitter sued Musk and some of his associates earlier this month over allegations that the billionaire “refuses to honor his obligations to Twitter and its shareholders because the agreement he signed no longer serves his personal interests. “.
Twitter scored an early victory on Tuesday when a Chancellor of the Delaware Court of Chancery ruled in favor of a five-day expedited trial that will begin in October.
CNBC Robert Hum contributed to this report.
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