Published on July 22, 2022, 4:17 pmUpdated July 22, 2022 6:13 pm.
Elon Musk’s failure to complete his $44 billion takeover bid for Twitter is starting to have a very concrete economic impact on the social network. According to the latest data released on Friday, the uncertainty around the operation weighed on the results of the second quarter.
The platform’s turnover fell 1% year-on-year to $1.18 billion. In particular, advertising revenue grew just 2%, a far cry from the double-digit figures of the first quarter. Subscription revenue, which should help Twitter diversify beyond online advertising, is a very small minority but has fallen by more than a quarter.
As a result, Twitter ends the quarter in the red. The social network posted a net loss of $270 million after making a profit for the same time last year. Given the uncertainty, the platform did not comment on its results for investors and did not release its guidance for the rest of the year.
Admittedly, like all social networks, Twitter is facing headwinds on the advertising front as the war in Ukraine and inflation force advertisers to cut budgets. Snapchat, for example, crashed in the stock market on Friday after the release of disappointing results. But in this difficult situation, Twitter also says it has fallen victim to the “uncertainty” associated with the takeover project.
Express test in October
In early July, Elon Musk announced that he no longer wanted to buy the social network after several weeks of hot and cold voicing his intentions. The richest person on the planet has criticized Twitter for not telling him the exact amount of spam and “bots” (fake accounts that send messages automatically) on the platform, which Twitter disputes.
But the social network decided that Elon Musk was fulfilling his obligations and filed a complaint. In the ongoing legal standoff, Twitter scored the first point this week: the Delaware judge who will decide the case has scheduled a trial for October, speeding up the process considerably. The trial itself will last five days. Twitter pleaded for a speedy legal action to avoid further punishment in the stock market, while Musk demanded more time to analyze the platform’s performance.
In any case, the clarification of the relationship is already contributing to the growth of the account. Twitter’s spending is up 31% year-on-year to over $1.5 billion. Specifically, Twitter has already spent $33 million on miscellaneous expenses related to Elon Musk’s planned takeover.
The only consolation for Twitter is that the very rich news of recent months has allowed it to attract users, while Facebook and Instagram face competition from TikTok or Snapchat. The social network currently has 238 million “monetizable” daily users (those it can send ads to), up nearly 17% year-over-year.
A profit that allowed him to soften the shock in the stock market, activity on the exchanges remained stable until the opening. However, the stock has lost a quarter of its value since its last spike in late April, when Twitter’s board accepted Musk’s takeover bid.