Twitter posted a quarterly loss on Friday, with income declining despite an increase in users.
The social media company’s most recent quarterly profit data provided a window into how its operations have fared during a protracted discussion with Tesla CEO and billionaire Elon Musk about whether he will take over the business.
Revenue fell 1% to $1.18 billion during the April–June period, highlighting challenges facing the advertising market as well as “uncertainty” surrounding Musk’s takeover proposal.
As a result, the company lost $270 million.
In comparison to the same time last year, there were 16.6 percent more daily active users, or 237.8 million people.
The advances were credited to “ongoing product improvements and worldwide debate around current events,” according to Twitter.
Overall, according to Wedbush analyst Dan Ives, “we would characterize the DAU numbers as better than feared and holding up quite firm in this climate.
“It demonstrates that digital ad expenditure is not plummeting off a cliff as anticipated, which is good news for competitors like Facebook, Pinterest, and Google in the space when compared to the nightmarish quarter of SNAP last night.
One day after social media firm Snap disclosed a sales loss, sending its shares falling 25%, Twitter’s results came amid general anxiety for digital companies.
A legal battle is imminent.
Twitter’s legal battle with Musk to fulfill his April promise to purchase the firm for $44 billion has overshadowed its most recent sales figures.
To close the agreement, Twitter last week sued Musk, and now the two parties are preparing for a trial in October.
Twitter announced that it wouldn’t hold its customary quarterly results conference call or publish a shareholder letter due to the impending purchase.
Twitter shares are currently trading more on the chance of the Musk transaction closing than on co-specific fundamentals, and the business has a good case, according to analysts at Vital Knowledge.
A turbulent three months for Twitter were included in the April-June fiscal quarter, beginning with the April 4 admission that Musk had bought a sizable stake in the business, opening the door for his takeover offer later that month.
The relationship quickly soured after Musk publicly posted his worries about Twitter and its staff and gave away that he was having second thoughts.
Musk’s conduct and his “continuous disparagement of Twitter and its personnel,” according to Twitter, generated uncertainty that was detrimental to the company’s business operations, personnel, and stock price.
Twitter made this claim in court.
Musk wanted to wait until next year due to the complexity of the case and his demands for more of Twitter’s internal data about how it counts fake and automated “spam bot” accounts, which he’s cited as a key reason for trying to terminate the deal.
It called for an expedited trial so the company could continue with important business decisions.
The trial was postponed this week by the judge, who agreed with Twitter that too much delay could harm the firm irreparably.
Unless Musk and Twitter resolve the issue prior to that time, it will be heard in Delaware’s Court of Chancery, which hears numerous high-profile corporate disputes.
Before Friday’s opening bell, shares fell 2%.