The imbroglio concerning its potential acquisition by Elon Musk leaves traces on Twitter. The company recorded results in the second quarter that were significantly below expectations and fell back into the red. This decline is attributed to “headwinds” in the advertising sector, fears weighing on the economic situation, but also “uncertainty linked to the ongoing acquisition of Twitter” by the boss of Space X and You’re here.
The group, which is trying to get the entrepreneur to keep its commitment in court, saw its turnover decline over one year (-1%), to 1.18 billion dollars, and recorded a net loss of 270 million, according to a statement released Friday.
“Twitter is in a rowboat in the middle of a storm”
Reported per share, an indicator closely followed by Wall Street, the loss is almost triple what analysts expected.
“Twitter is in a rowboat in the middle of a storm,” commented Jasmine Enberg, analyst for Insider Intelligence, who recalled that the group was “used 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 advertiser budgets.
Thursday, Snap had thus opened the ball of social networks and posted a greater loss than expected and a turnover lower than expected, which earned it a loss of more than 30% on Friday in the exchanges prior to the opening of the New York stock market.
Situation a little better than for Snap
Analysts nevertheless welcomed the increase of 8.8 million in the number of so-called “monetizable” daily active users of Twitter, that is to say who can be exposed to advertising on the platform, for a total of 237 ,8000000. “It’s better than we feared and the numbers remain relatively strong considering the current environment,” responded Dan Ives of Wedbush Securities in a note.
“Compared to Snap’s nightmare yesterday, we see that advertising has not collapsed,” added the analyst. After the publication of quarterly results, the title thus limited its decline to less than 2% in prior electronic trading at the opening of Wall Street.
The Elon Musk saga does not help
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 file moved on the legal ground, where the leaders intend to obtain that the billionaire is forced to acquire Twitter.
On Tuesday, a judge from a specialized court in Delaware (northeast) ordered a tight trial over five days in October. The magistrate thus acceded to Twitter’s request, which called for an accelerated procedure to limit the damage of this saga on the group, and dismissed, on the other hand, the arguments of Elon Musk’s lawyers, in favor of the debates not won’t open before 2023.
The businessman accuses 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 blue bird group disputes these assertions and criticizes Elon Musk for using them as a diversion.
In the imperative to convince on the solidity of its advertising activity
Many investors believe that Twitter has regained control, which has allowed its share price to rebound. It is now at the same level as on the eve of the announcement, on April 4, of Elon Musk’s stake in the capital, the first step before the filing 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 that its advertising business is solid regardless of the outcome of its legal battle with Musk”, explained Jasmine Enberg.
As with the publication of the first quarter, Twitter did not organize the traditional conference call on Friday to present the results.