The conflict between Twitter and Elon Musk is hurting its bottom line. The business announced on Friday that its revenue for the three months ended in June was $1.18 billion, a 1% decrease from the same period last year. Twitter attributed some of the decline in revenue to “uncertainty” around Musk’s impending takeover, which he is attempting to avoid.
Twitter (TWTR) added that the difficulties with its advertising business brought on by problems with the larger economy contributed to the declining sales, raising potential concerns about a decline in advertiser interest in the social media sector. In addition, the parent company of Snapchat reported slower-than-anticipated revenue growth, which is partially attributed to fears of an impending recession and inflation reducing advertising spending. As a result, in Friday’s pre-market trade, Snap stock fell 31.5 percent.
The reaction of investors to Twitter’s financial results was more subdued. In pre-market trade on Friday, Twitter shares fell by around 2% as a result of the news.
Twitter’s user base expanded even if its revenue fell. The company’s monetizable daily active users increased to 237.8 million during the quarter, an increase of almost 16 percent on an annual basis. However, Twitter reported a net loss of $270 million for the quarter, up from a profit of $66 million in the same period last year.
This week, the verdicts came after a judge decided that the trial in Twitter’s case against Musk would start in October, giving the social media firm an early victory after asking for accelerated procedures. Musk filed a termination request for the $44 billion acquisition deal earlier this month, alleging that Twitter had broken the terms of the agreement by withholding information on the number of bot accounts using its network. Twitter retaliated by filing a lawsuit, alleging Musk had broken the agreement and requesting that the court order him to do so.
Both an earnings call with Wall Street investors and Twitter’s financial guidance for the following quarter were postponed due to the impending Musk acquisition. The deal was scheduled to finalize before the end of this year before the conflict between Twitter and Musk broke out.
Read Also: Twitter vs. Musk trial date set for October
Elon Musk’s failed takeover cost Twitter $33 million
Between April and June 2022, Twitter invested $33 million (£27 million) in Elon Musk’s plan to acquire the company. It also stated that 237 million monthly active users were now, which was worse than predicted. However, the company reported a net loss of $270 million.
Since then, Mr. Musk has changed his mind about the acquisition, and now a court date has been scheduled for October because Twitter wants to push the deal through. Potentially at risk is a $1 billion termination fee.
Twitter declined to comment on its most recent financial results and gave the excuse of a “pending transaction.” The report’s coverage spans April through June 2022.
Twitter has strengthened its stance on the network’s spam and bogus accounts, which Elon Musk cited as justification for ending the agreement. Twitter’s revenue in 2021 was $5 billion (£4.2 billion), yet during the past year, its share price has dropped by 45%.
Snapchat’s parent company, Snap, posted sales of $1.11 billion for the three months ending in June on Thursday, falling short of Wall Street forecasts. Following the news, its shares dropped by more than 25%. It said that some of its sponsors had reduced their spending due to increased expenses. Additionally, it said that a modification implemented by Apple the previous year—which allowed iPhone and iPad users to choose whether or not to be tracked by apps—had an impact on its business.
Because tech companies can no longer observe their users’ other online activity and adjust advertising accordingly, personalization of ads—a very valuable service—has been impacted.
Twitter reported a 2 percent gain in ad revenue to $1.08 billion. Next Monday, Alphabet, the parent company of Meta and Google, will announce its financial results.
