Twitter blames Elon Musk, weak ad market for earnings shortfall

Twitter Inc on Friday blamed uncertainties related to its US$44 billion acquisition by Elon Musk and a weakening digital ad market for a surprise fall in quarterly revenue.

The results come as Twitter has sued Musk for dropping his offer to buy the company, and is now preparing for a legal showdown in a trial set to begin in October. The deal uncertainty has worried Twitter’s advertisers and caused chaos inside the company.

Advertising revenue rose just two per cent to US$1.08 billion, missing Wall Street expectations of US$1.22 billion, according to Refinitiv IBES data.

Total second-quarter revenue, which also includes revenue from subscriptions, was US$1.18 billion, compared with US$1.19 billion a year earlier. Analysts were expecting US$1.32 billion.

Twitter shares were down three per cent in trading before the bell.

Twitter said its net loss was US$270 million, or 35 cents per share, down from a profit of US$65.6 million, or eight cents per share, a year earlier.

Its adjusted eight-cent loss missed expectations for a 14-cent adjusted profit.

The company’s results come after Snapchat parent Snap Inc posted weak results and declined to make a forecast, citing “incredibly challenging” conditions as advertisers cut back on spending.

Twitter and its peers, including Snap and Alphabet, saw an uptick in revenue last year as brands spent heavily on advertising online, eyeing a recovery from the pandemic.

But inflation pressures and fears of a recession this year have forced brands to rethink their marketing budgets.

At the same time, Gen Z-favorite TikTok and tech giant Apple Inc, which gives users the choice to opt out of data tracking, are grabbing market share in the digital ad space.

by Reuters