Twitter's stock plunges amid decline in users

Jul 29, 2018, 18:45
Twitter's stock plunges amid decline in users

Both Twitter and Facebook moved to crack down on bots and fake accounts after learning of efforts to manipulate the social platforms during the 2016 USA presidential election.

Facebook continues to grapple with big existential questions, ranging from its users' privacy to tech addiction to how it deals with fake news and misinformation, hate speech and extremism on its service.

The corporate mentioned the work it was doing to wash up Twitter by purging automated and spam accounts had some influence on person metrics within the second quarter, and that it was deciding to prioritize tackling suspicious accounts and lowering hate speech and different abusive content material over initiatives that might entice extra customers. That company is battling privacy controversies and rising regulation in Europe while also implementing costly new measures to battle disinformation on its platform.

The World Cup introduced in $30 million of income within the quarter. Those two events are behind the companies now.

Twitter reported that it posted a profit of $100 million in the second quarter, after a loss of $116 million a year earlier as revenue rose about 24 percent to $711 million.

However, Twitter stopped disclosing the number of daily users in June last year, only year-over-year percentage changes. That followed Thursday's 19 percent drop in shares of Facebook - the biggest one-day drop in history, wiping out $119 billion in market value. The Motley Fool owns shares of and recommends Twitter.

Facebook and Twitter each have hundreds of millions of users, with Facebook clearly in the lead.

Twitter share price tumbles after it loses 1m users in three months

"We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation".

Brian Wieser at Pivotal Research Group said efforts to curb fake accounts "should be viewed positively because these efforts improve Twitter's position with regulators and with advertisers, who see the user base as higher quality when purges occur".

The quarterly results confirmed that Twitter has lost a measurable number of active users as it started removing inactive and locked accounts as part of its clean-up exercise in the second quarter.

Analysts expected a gain of 1 million users, and the results could harden concerns Twitter lacks a clear strategy to fix platform problems and grow usage and revenue together.

Chief executive Jack Dorsey said Twitter prioritied the long-term health of the platform over short-term metrics. Twitter refers to platform "health" when describing the spam and other issues. Management expects monthly active users to decline sequentially in Q3, falling by mid-single-digit millions. Rich Greenfield, an analyst at BTIG, tweeted this morning that daily active user count is a more reliable indicator of Twitter's revenue potential than monthly active user count, citing a research note BTIG published past year. Twitter eliminated a number of fake accounts. Non-GAAP earnings of 17 cents per share were in-line with estimates. It was attacked for allowing third parties access to user data.

The new capital expenditures forecast is for between $450 million and $500 million, up from $375 million to $450 million, as Twitter expands and upgrades the computer infrastructure underlying its service.

YOU MIGHT ALSO LIKE
popular