Twitter parks its losses at Elon Musk’s door

Twitter has blamed Elon Musk’s erratic pursuit of the company and a global advertising slowdown for its revenues unexpectedly declining last quarter.

Twitter swung into the red in the three months to June. Picture: AFP

Twitter has blamed Elon Musk’s erratic pursuit of the company and a global advertising slowdown for its revenues unexpectedly declining last quarter.

The social media group swung into the red in the three months to June, during which Musk revealed a 9 per cent stake and agreed to buy the business for $US44bn ($63.5bn), only to then threaten to terminate the deal. He has subsequently pulled out entirely, setting the scene for a court battle.

Revenue at Twitter declined 1 per cent to $US1.18bn over the period, shy of the average $US1.32bn forecast among analysts. It reported a net loss of $US270m, down from profit of $US65.6m in the same period in 2021.

Trading was challenged by “uncertainty” surrounding the acquisition and “advertising industry headwinds associated with the macroenvironment”, Twitter said. Advertising sales increased 2 per cent to $US1.08bn while other revenue, including subscription fees, dropped 27 per cent to $US101m.

Elon Musk formally moved to drop his purchase of Twitter this month, citing a lack of clarity over the prevalence of fake accounts on its platform. Picture: AFP

The failure to meet consensus Wall Street expectations – hours after Snap, owner of Snapchat, reported its weakest sales growth since listing and did not provide guidance for the current quarter – has set the stage for a choppy set of earnings from Silicon Valley next week. At midday, shares in Snap had slumped almost a third, or $US5.37, to $US10.98 in New York; Twitter declined US37c, or 0.9 per cent, to $US39.15; Meta Platforms, owner of Facebook and Instagram, fell $US10.22, or 5.6 per cent, to $US172.95; and Alphabet, the world’s largest ad business and owner of Google and YouTube, slipped $US3.43, or 3 per cent, to $US110.91.

Musk, 51, formally moved to drop his purchase of Twitter this month, citing a lack of clarity over the prevalence of fake accounts on its platform and alleging executives had “failed or refused” to provide relevant information. The company, in turn, sued the tycoon, claiming he caused “irreparable harm” to its business and setting the stage for months of legal wrangling. Both sides are expected in court in October. Twitter has asked a Delaware judge to force Musk to complete the deal.

Twitter, based in San Francisco, runs one of the world’s largest social ­networks.

It accepted Musk’s $US54.20 a share offer in April after he built up a big stake and rejected an invitation to join its board.

Monetisable daily active users on the platform – a key metric for Twitter – grew 16.6 per cent on the year to finish June at 237.8 million, “driven by product improvements and global conversation around current events”, it said. Twitter maintains that fake accounts amount to fewer than one in 20 of active users. Musk has repeatedly doubted the claim.

Twitter acknowledges it applied “significant judgment” to reach this figure, and the number of so-called spam accounts “could be higher”.

“We are continually seeking to improve our ability to estimate the total number of spam accounts and eliminate them from the calculation of our mDAU (monetisable daily active users), and have (suspended) a large number of spam, malicious automation and fake accounts,” Twitter said.

The Times