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

After Snap Inc. has issued a dire warning about the state of the advertising landscape, Twitter Inc. blamed the economy and more as she failed to deliver her own results on Friday.

Twitter TVTR,
+0.81%
fell short of earnings expectations with second-quarter results, but leaned towards a loss. Social media company involved in merger saga with Tesla Inc. tsla,
+0.20%
CEO Elon Musk announced the results in a more low-key manner on Friday. Like a quarter earlier, Twitter kept to a fairly simple post, skipping the traditional call for profit.

Twitter’s latest quarter revenue was $1.18 billion, almost unchanged from $1.19 billion a year earlier, while analysts polled by FactSet had expected $1.32 billion. The company said in a statement that the results reflect “ad industry headwinds related to the macro environment, as well as the uncertainty surrounding the upcoming acquisition of Twitter by a subsidiary of Elon Musk.”

The Twitter post did not detail how Musk’s situation affected his business in terms of earnings, and a company spokesman said Twitter does not provide additional data beyond what was mentioned in the post.

“They kind of go with the flow, that’s my opinion, and I think others, and I think the markets,” University of Richmond law professor Carl Tobias told CNET.

Shares of Twitter tumbled 2.1% in morning trading but reversed course and were up 0.7% by the end of the session.

See also: Twitter has more to worry about than Elon Musk

The company posted a net loss of $270 million in the second quarter, or 35 cents per share, while net income for the last year’s quarter was $66 million, or 8 cents per share. Twitter noted that it incurred about $33 million in expenses related to the Musk acquisition deal in the second quarter, as well as about $19 million in severance pay.

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

The weak financial results “didn’t come as much of a surprise,” said Baird analyst Colin Sebastian, in part because of “a 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 for the quarter, while analysts had expected 238.1 million.

In general, we would characterize [user] metrics are better than feared and are holding up relatively well in this environment,” writes Wedbush analyst Dan Ives.

Opinion: While Snap is collapsing, its founders are concerned about protecting the people that matter: themselves.

Results come after Snap SNAP,
-39.08%
released Thursday afternoon, second-quarter turnover is below expectations. Snap noted in its shareholder letter “increased competition for advertising dollars, which are now growing more slowly.”

In light of Snap’s “nightmarish” performance, Twitter’s report wasn’t all that bad, Ives said, showing that “digital advertising spending isn’t falling off the cliff as feared, which is positive for marketers.”

But MoffettNathanson’s Michael Nathanson was more optimistic about Twitter’s positioning.

“We believe Twitter is particularly sensitive in this macro environment given its focus on brand spending, which we believe is less sustainable than performance marketing, especially during periods of weak economics,” he wrote. “In addition, Twitter is a digital platform where marketers can turn spending on and off in real time, so we will likely see their ad revenue take a hit before other branded platforms like linear TV.”

Don’t Miss: Here are 5 things we’ve learned from the reporting season.

Sebastian de Baird highlighted a similar concept, writing that companies that are tightening their belts often see ad spend as the first area to cut.

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

Twitter shares have fallen about 19% over the past three months in a tumultuous period as Musk struck a $44 billion deal to buy the social media platform before announcing he intends to terminate the deal, alleging Twitter underestimated the prevalence of bot accounts. . on the platform and prevented Musk from getting the real number. Twitter is looking to move forward with the original deal.

The case will go to trial in October, after a judge upheld Twitter’s request for a fast track trial in the fall.

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