Twitter’s second quarter earnings report released Friday underperformed analysts’ expectations, which the company chalked up to shaky dynamics in the advertising industry and “uncertainty” about the company’s pending acquisition by Elon Musk.
Twitter’s revenue for the quarter came in at $1.18 billion, shy of the $1.32 billion that analysts had expected and down from $1.19 billion in the second quarter of 2021, The Wall Street Journal reported.
Twitter’s announcement cited “advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk” for the earnings miss.
While expected to post earnings per share of $0.14, Twitter actually lost $0.08 per share, the company’s first quarterly loss in two years and second ever, largely driven by a 31% year over year increases in expenses, CNBC reported.
Twitter has accused Musk of “buyer’s remorse” and is suing the billionaire to force him to go through with his acquisition, scoring a key win in their first legal face-off this week. Twitter’s lawyers have argued that “the company is faced with substantial, increasing risk” from the volatility surrounding Musk’s withdrawal from the deal, which they believe contributed to the poor second quarter performance, according to the WSJ.
“Twitter’s been focused on Elon over the last quarter. It’s an easy reason for advertisers to shift their spend away from Twitter,” Benchmark analyst Mark Zgutowicz told the WSJ.
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Advertising, from which Twitter generates a substantial portion of revenue, has taken a hit in general from poor economic conditions like high inflation, recession fears and supply chain issues that have caused companies to spend less on marketing, CNBC reported. Fellow ad-driven company Snap — the parent company of the photo messenger app Snapchat — also underperformed analysts’ expectations this week and saw its stock price plummet by nearly 40%, the WSJ reported.
Because of the pending acquisition by Musk, Twitter has said that it will not be providing expectations for the third quarter and will not be hosting an earnings call, CNBC reported.