The disagreement between Twitter and Elon Musk is having an impact on the social media company’s operations. The company said on Friday that its sales for the three months ending in June were $1.18 billion, a 1% decline from the previous year. Twitter attributed some of the drops in sales to “uncertainty” around Musk’s upcoming acquisition, which he is presently trying to prevent.
There may be concerns about a fall in advertising in the social media industry after Twitter (TWTR) disclosed that its advertising company was having issues due to larger economic issues. Likewise, Snapchat’s parent firm reported lower-than-expected revenue growth, which is partially ascribed to advertisers cutting down on spending due to recession and inflationary concerns. As a result, the price of Snap stock dropped 31.5 percent in Friday’s pre-market trading.
Investors appeared to have a more muted response to Twitter’s financial reports. However, in pre-market trading on Friday, Twitter’s shares decreased by almost 2% as a result of the news.
Despite declining revenue, Twitter user numbers rose. On an annual basis, the company’s monetizable daily active users rose to 237.8 million during the quarter. Twitter, on the other hand, recorded a net loss for the quarter of $270 million as opposed to a profit of $66 million at the same time last year.
The judgments came after a court last week ordered that the trial in Twitter’s lawsuit against Musk begin in October. The social media corporation, which had requested faster procedures, won this battle right away. In an earlier lawsuit this month, Musk charged Twitter with breaking the terms of the $44 billion acquisition agreement by concealing data on the number of bot accounts utilizing its network. In retaliation, Twitter filed a lawsuit alleging that Musk had violated the contract and asked the court to compel him.
Due to the anticipated Musk acquisition, Twitter opted not to hold an earnings call with Wall Street investors or provide financial guidance for the following quarter. It was believed that the transaction would be completed by the end of the year before the issue between Twitter and Musk arose.
Twitter spent $33 million in just three months on an Elon Musk deal
Twitter invested $33 million (£27 million) in Elon Musk’s planned takeover of the business between April and June 2022. Furthermore, it noted that there were currently 237 million active monthly users, which was worse than anticipated.
A court appearance has been scheduled for October because Mr. Musk has changed his mind about the acquisition, and Twitter is now pushing for the agreement to close. As a result, a termination fee of $1 billion might be in jeopardy.
Twitter refused to share its most recent financial results, citing the “pending purchase” as the reason. However, the report covers the period from April to June 2022.
Read Also: Twitter vs. Musk: Court rules in favor of October trial
Elon Musk cited Twitter’s tougher stance on spam and fake accounts as the reason the agreement was terminated. In 2021, Twitter made $5 billion (£4.2 billion) in revenue, but its share price fell by 45% over the previous year.
The parent company of Snapchat, Snap, reported earnings of $1.11 billion on Thursday, missing Wall Street expectations. Its shares decreased by more than 25% when the news was announced. It stated that several of its advertisers had cut back on their expenditures as a result of rising prices. It also asserted that a change made by Apple the year before, which gave iPhone and iPad users the option to opt-out of having apps track their location, affected it.
The personalization of advertisements, a service that tech businesses find to be incredibly useful, suffers due to the inability of tech companies to observe their users’ other online activities and tailor advertising accordingly.
Twitter said that its ad income increased by just 2% to $1.08 billion. The profits report from Alphabet, the organization that owns Meta and Google, is anticipated the following week.
