Twitter accuses Elon Musk, bearish ad market for losses in revenues

By Al Mayadeen English
Source: Agencies
22 Jul 2022 20:26

The group saw its turnover decline over one year (-1%), to 1.18 billion dollars, and recorded a net loss of 270 million dollars.

Twitter accuses Elon Musk and bearish ad market for losses in revenues

Twitter recorded results in the second quarter that were significantly below expectations and attributed this decline to the legal battle against Musk and to the "headwinds" in the advertising sector.

Analysts were expecting Twitter to grow revenues by around 10%, yet the losses ended up amounting to triple of what analysts expected.

Last quarter, Twitter’s revenue came in at $1.18 billion, a decline of 1% from the second quarter the year prior.

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 stock likewise fell more than 33% in early trading on Wall Street on Friday to nearly $10, a far cry from its 2017 IPO level of $17.

Analysts nonetheless welcomed the increase of 8.8 million in the number of so-called "monetizable" daily active users of Twitter, that is to say, those who can be exposed to advertising on the platform, for a total of 237,8 million. Twitter now has 237.8 million monetizable daily active users (mDAUs), up from 229 million last quarter.

Beyond an unfavorable economic situation for the entire sector, Twitter is also weakened by the saga of its hypothetical takeover by Elon Musk. After the renunciation of the contractor at the beginning of July, the case moved to legal grounds, where leaders now intend to force the billionaire to stick to its commitments.

The tech mogul accused Twitter executives of having lied about the proportion of automated accounts and spam on the platform and of not having provided him with enough data for verification. The social media company disputes these assertions and criticizes Musk for using them as a diversion.

Analysts are now expecting growth in the advertising market to decelerate significantly in the coming months, as the economy responds to broader issues coming out of the pandemic, such as high inflation and supply chain problems.

Twitter makes the vast majority of its revenues from advertising, although it has tried to introduce a few subscription products in the past year to help diversify its business.

On Friday, Twitter said subscription and other revenue totaled $101 million, an increase of 7% year over year when excluding the sale of an ad tech firm called MoPub in January.