Twitter announced its Q2 2022 financial results on Friday, revealing lower-than-expected numbers for revenue, earnings, and user growth. When naming reasons for the slowdown, the company placed partial blame on Tesla CEO Elon Musk for casting uncertainty on their acquisition deal.
Twitter’s Q2 Figures
According to Twitter’s press release, the company’s revenue decreased by 1% year over year to $1.18 billion. A Refinitiv survey of analysts had an expected revenue of $1.32 billion.
On one hand, advertising revenue – which represents the vast majority of Twitter’s total inflows – showed a 2% increase during that timeframe. However, this was more than offset by a 27% fall in subscription and other revenue, almost entirely due to Twitter’s sale of MoPub to AppLovin.
The losses didn’t stop there: Costs and expenses totaled over $1.5 billion last quarter, with $33 million related to the company’s pending acquisition in Q2. Furthermore, while monetizable daily active users grew to 237.8 million – up 16.6% compared to Q2 2021 – it still fell short of analysts’ prediction of 238.08 million.
The company reported a net loss of $270 million, “representing a net margin of -23% and diluted EPS of -$0.35.”
Twitter claimed that the revenue drop can be chalked up to “advertising industry headwinds associated with the macroenvironment,” alongside “uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk.”
Twitter also stated that it would host no earnings call, nor issue a shareholder letter related to its Q2 earnings, due to the pending acquisition deal.
Elon VS Twitter
Elon Musk and Twitter are now locked in a legal battle wherein the former wishes to withdraw from their $44 billion acquisition agreement formed in April. Musk claims Twitter has failed to provide him with useful information concerning the prevalence of spam bots on the platform – a problem he’s said he wishes to solve when in charge.
But Twitter believes such claims are but a pretext for leaving and hold no merit.
“Musk apparently believes that he — unlike every other party subject to Delaware contract law — is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away,” read Twitter’s court documents
Twitter’s stock fell slightly over the weekend following Musk’s reversal of plans and still sits considerably short of his buyout offer of $54.20 per share.
Tesla released its own earnings report on Wednesday, revealing that the company has sold nearly all of its Bitcoin holdings. Musk claims the sale was unrelated to any overarching thesis about Bitcoin as an asset.