Twitter posted a slump in revenue and a hefty loss in the past quarter surrounding Elon Musk's turbulent takeover attempt. The US short message service blames the back and forth around the tech billionaire's plans for this. The reasons were uncertainties in connection with the failed takeover by the billionaire Tesla boss and a weakening digital advertising market, the group announced today.
Lawsuit to force takeover
Twitter reported a net loss of $270 million, or 35 cents a share, for the second quarter, down from a profit of $65.6 million, or 8 cents a share, a year earlier. Quarterly sales fell slightly to $1.18 billion from $1.19 billion last year, it said. Analysts had actually given Twitter more credit. They had expected adjusted earnings of 14 cents per share and sales to increase to $1.32 billion.
Musk announced in April that he would buy Twitter for around $44 billion. A few weeks later, however, he unilaterally declared the deal suspended. In early July, just after the end of the quarter, he finally made a 180-degree turn and withdrew his offer. To justify this, he referred to his previously unsubstantiated claims that Twitter had significantly more fake accounts than the company's estimate of less than five percent. Observers consider this to be unfounded.
Termination "invalid and unlawful"
The San Francisco-based social media company now wants to force Musk to go through with the merger as agreed with a lawsuit. In a letter to Musk's legal representative, Twitter's lawyers said his termination of the deal was "invalid and unlawful" from the company's perspective. Contrary to Musk's claims, Twitter did not violate the takeover agreement. On the other hand, the billionaire violated the agreement knowingly and intentionally with his withdrawal.
According to Twitter, the costs associated with the takeover deal added up to $33 million in the past quarter. The agreed takeover price was $54.20 per share. At the start of US trading, the course fell by more than one percent to a good $39 today after the figures were presented.
Ad revenue goes down
The number of daily active users that Twitter can reach with its advertising because they use the in-house app or the web version only rose from 229 million to 237.8 million within three months. In the first quarter, the service gained a good 14 million users.
The pressure on Twitter revenue comes as no surprise given inflation and a sluggish economy, many companies are cutting back on ad spending. The company behind the photo app Snapchat reported its weakest sales growth to date with a plus of 13 percent in the second quarter. Snapchat stock fell more than a third in early U.S. trade.
Referring to Musk's takeover attempt, Twitter canceled the usual quarterly conference call for US companies for the second time in a row, in which analysts can ask top management about details of business development.