Twitter says Elon Musk’s ‘uncertainty’ impacted earnings and stocks held up

After Snap Inc. A dire warning about the state of the advertising landscape, Twitter Inc. He blamed the economy and more for failing to deliver on Friday.

Twitter TWTR,
+ 0.81%
He missed revenue expectations with second-quarter results while swinging into a loss. The social media company is embroiled in an epic merger with Tesla Inc. TSLA,
+ 0.20%
CEO Elon Musk, announced the results more quietly on Friday. As in the previous quarter, Twitter stuck to a fairly straightforward post while skipping the traditional earnings call.

Twitter’s revenue for the fourth quarter was $1.18 billion, roughly flat with $1.19 billion reported in the previous year, while analysts polled by FactSet expected $1.32 billion. In a statement, the company said the results reflected “advertising industry headwinds related to the macroeconomic environment as well as the uncertainty related to the impending acquisition of Twitter by an Elon Musk subsidiary.”

La publication de Twitter ne détaillait pas exactement comment la situation de Musk affectait son activité du point de vue des revenus, et un porte-parole de la société a déclaré que Twitter ne fournissait pas de ventilations supplémentaires au-delà de ce qui était mentionn publishing.

“They’re kind of lost, that’s the perception I have and I think other people have and I think markets have,” University of Richmond Professor of Law Karl Tobias told CNET.

Twitter shares fell 2.1% in morning trading, but reversed course to end the session 0.7% higher.

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The company reported a net loss of $270 million in the second quarter, or 35 cents per share, while it posted net income of $66 million, or 8 cents per share, in the last year’s quarter. Twitter noted that it incurred about $33 million in costs related to its Musk acquisition in the second quarter, plus about $19 million in termination costs.

On an adjusted basis, the company reported a loss of 8 cents per share. It reported 20 cents of adjusted earnings per share in the prior year. The consensus for FactSet for the last quarter was 14 cents in adjusted earnings per share.

The lackluster financial results weren’t a “big surprise,” according to Bird analyst Colin Sebastian, in part due to the “well-documented slowdown in broader ad spending during the quarter,” as well as Musk’s recent revelations.

Twitter reported 237.8 million monetized daily active users during the quarter, while analysts had expected 238.1 million.

“In general, we will distinguish [user] Wedbush analyst Dan Ives writes that the metrics are better than feared, and they hold up relatively well in this environment.

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The results come after Snap SNAP,
-39.08%
On Thursday afternoon, the second quarter trading was published below expectations. In its letter to shareholders, Snape noted “increasing competition for ad dollars that is now growing slower.”

In light of Snap’s “nightmare” performance, Twitter’s report wasn’t that bad, according to Ives, showing that “digital ad spending isn’t falling off a cliff as feared, which is a positive for marketers.” “Others in Space”.

But MoffettNathanson’s Michael Nathanson was more upbeat about Twitter.

“We think Twitter is particularly sensitive in this macro environment due to its focus on brand spending, which we believe is less resilient than performance marketing, especially in weak economic times,” he said. “Twitter is also a digital platform where marketers can toggle spending on and off in real time, which is why we’re likely to see their ad revenue impact before other branded platforms like Line TV.”

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Sebastian de Bird highlighted a similar concept, writing that belt-tightening companies often see advertising spending as the first area of ​​reduction.

“It also has a faster short-term impact on digital advertising than other formats, but it also means recovery can/will be faster,” he wrote.

Twitter shares have fallen about 19% in the past three months during a turbulent period that saw Musk seal a $44 billion deal to buy the social media platform before announcing his intention to end the agreement, arguing that Twitter had downplayed the proliferation of bot accounts. . On the podium, Musk’s efforts to get the real figure were thwarted. Twitter is looking forward to the original deal.

That case will go to court in October, after a judge upheld Twitter’s request for an expedited trial in the fall.

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