Uncertainty over Musk buyout weighs on Twitter’s second-quarter results | Economy

An image of Elon Musk on a mobile screen next to Twitter logos.
An image of Elon Musk on a mobile screen next to Twitter logos. Reuters

Twitter shares plunged on Friday after the social media platform embroiled in a legal battle with Elon Musk for suspended purchase operation, will report having lost $270 million (264 million euros) in the second quarter due to doubts about the mogul’s “ongoing acquisition transaction”. The company that owns the little bird’s social network is ahead of other technology companies such as Alphabet, Apple, Meta and Microsoft, which will publish their results next week. in a worrying scenario for the sector. Twitter had recorded a net profit of 65 million over the same period of 2021, as reported by the multinational in a press release. Twitter’s revenue between April and June totaled $1,176.6 million (€1,153 million), down 1.1% from a year earlier.

Elon Musk’s rudeness and scares have not only helped fuel uncertainty over Twitter’s direction, they’ve also undermined its credibility, analysts say, translating into a loss of value. Indeed, Twitter and Musk will face off in court in October, after lawyers for the world’s richest man asked for an extension to wind up the process until February 2023. The main objections of the Tesla founder and SpaceX focus on the number of fake accounts and bots on the social network.

Between April and June, Twitter’s advertising revenue rose 2.2% year-on-year to $1,076 million (€1,054 million), while subscription revenue fell 26.3%, at $101 million. International revenue fell 4% to $515 million.

Thus, in the first half of this year, the company achieved a net profit of 243.3 million dollars (238 million euros), 82% more than a year earlier, while revenues increased by 6 .8%, up to 2,377.6 million dollars (2,330 million euros).

Better data offers the average monetizable daily active users, which between April and June reached 237.8 million, an increase of nearly nine million from the first three months of 2022 and 16.6% year-on-year. The controversy generated by the purchase operation launched by Musk, in a social network particularly prone to noise, played a driving role.

Of the total monetizable daily active users, 41.5 million visited the network in the United States at the end of the second quarter, compared to 39.6 million in the first quarter (14.7% more than a year earlier) . In the rest of the world, the annual increase was 17%, to 196.3 million, against 189.4 in the first quarter.

On Tuesday, Delaware Chancery Court Judge Jude McCormick ruled that trial for Elon Musk’s reversal in Twitter takeover to be held in October, after the tycoon had asked to postpone it to February in order to better prepare the defense of the case. McCormick therefore agreed with the company, which had asked to “expedite” the trial, but until September. At stake is a $44 billion operation that has revolutionized not just the industry, but the global economy as well.

After three months of denials and rumours, with up-to-the-minute media coverage, Musk communicated to Twitter on July 8 his resignation from the contract to buy the social network after not receiving a response from the company on the number of fake accounts that exist on the platform, as well as the method followed by the company to audit and suspend them. It wasn’t Musk’s first rudeness, who in mid-May temporarily suspended purchase Unhappy with the company’s calculation of fake accounts, less than 5% of profiles according to Twitter.

They paint a rough picture for tech companies, with hiring plans slowed by economic uncertainty, even waves of layoffs, a phenomenon particularly noticeable in the startups. Snap shares plunged yesterday after disappointing quarterly results. The company, which runs social media platform Snapchat, said it would “significantly reduce” hiring and revenue growth in the current quarter was “approximately zero”. The current macroeconomic climate seems elusive for digital.

Leave a Comment