LONDON (AP) — Twitter reported a quarterly loss on Friday and declining revenue caught Wall Street off guard as the number of people using the platform surged.
The latest quarterly earnings figures offered a glimpse of how the social media platform has fared during a months-long negotiation with billionaire Tesla CEO Elon Musk after he said he would buy the company and then changed his mind.
It was worse than industry analysts had anticipated.
The company lost $270 million in the April-June period, or 8 cents a share. Wall Street had expected earnings per share of 14 cents, according to a FactSet survey.
Inflation has cut ad spending and that was a big drag on Twitter’s quarterly revenue, which fell 1% to $1.18 billion. The company also cited “uncertainty” over the acquisition by Musk.
Twitter is not holding calls with analysts and will not publish a letter to shareholders, as is the norm, due to the pending acquisition.
The underlying numbers on Twitter, however, were good. The number of daily active users increased 16.6% to 237.8 million compared to the same period a year earlier.
Those numbers are particularly impressive in the wake of a quarterly earnings report Thursday night from social media company Snap.
Snap also saw advertising drop in the high-inflation environment and shares plunged more than 30% on Friday before the opening bell.
“Compared to SNAP’s nightmarish quarter last night, it shows that digital ad spending isn’t falling off a cliff as feared, which is a positive for others in the space like Facebook, Pinterest and Google,” wrote Dan Ives, who covers technology for Wedbush.
Shares of Twitter Inc. rose 1% at the opening bell on Friday as the clash with Musk overshadowed almost everything. Twitter is trying to force Musk to make good on his April promise to buy the company for $44 billion. Last week, Twitter sued Musk to complete the deal, and both sides are preparing for a court trial in October to resolve the dispute.
The April-June fiscal quarter spanned three tumultuous months for Twitter, beginning with the April 4 revelation that Musk had acquired a large stake in the company, paving the way for his takeover bid later that month. It didn’t take long for the relationship to fall apart when Musk publicly tweeted his concerns about Twitter and its employees and noted that he was having second thoughts.
Twitter argued in court that Musk’s actions and his “repeated disparagement of Twitter and its staff” created uncertainty that hurt Twitter’s business operations, employees and share price.
He called for an expedited trial so the company could proceed with important business decisions, while Musk sought to wait until next year due to the complexity of the case and his demands for more internal Twitter data on how it counts fake and automated spam. bot,” which he cited as one of the main reasons for trying to get out of the deal.
This week, a judge set the trial for October and sided with Twitter’s concerns that too much delay could cause irreparable damage to the company. It will take place in Delaware Chancery Court, which handles many high-profile trade disputes, unless Musk and Twitter settle the case before then.