Twitter stock: Share price drops sharply as platform releases second quarter result
The company reported 1 million fewer monthly users than the previous quarter
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Your support makes all the difference.Twitter Inc shares have plunged 17 per cent after the social media platform revealed its monthly users dropped by 1 million in the second quarter - and predicted the number will decline further.
The decline in monthly users comes as Twitter contends with increasing fake spam accounts and dangerous rhetoric on the platform.
Monthly active users are at 335 million in the current quarter, according to a statement released by Twitter on Friday, down from 336 million in the first quarter.
Despite the decline, the number of users is up 2.8 per cent from the past year, but Twitter expects the numbers to continue falling as the crusade against spam accounts continues.
“Our second quarter results reflect the work we’re doing to ensure more people get value from Twitter every day,” said Twitter CEO Jack Dorsey in a statement. “We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviours that distort and distract from the public conversation.”
According to Dorsey, the company’s machine-learning algorithms are identifying more than 9 million potential spam or fake accounts a week.
The company also suggested the decline is in part due to stricter privacy rules in Europe and changes to the way the service is used through SMS messaging.
Twitter reported net income for the third consecutive quarter, driving shares 79 per cent higher this year to $42.94 (£32.75) at Thursday’s close. However, the company’s forecast for third-quarter earnings before interest, taxes, depreciation and amortisation of $235m (£179m) is lower than the analyst average estimate of $268m (£204m).
Although Twitter is confident that their efforts are in the best long-term interest of the platform, the declines have raised concerns among investors in the company.
As President Trump’s favoured outlet of communication, the fear is that the platform will not be able to attract general audience users, according to Bloomberg.
“Despite Trump being perhaps the most high-profile user possible, usage has not dramatically improved over the past couple of years,” Benjamin Schachter, an analyst at Macquarie Securities wrote to investors before the earnings were released.
However, Twitter doesn’t measure success by monthly visitors - instead highlighting daily active users as the best measure, which has increased by 11 per cent from a year earlier.
The increase marks the seventh consecutive quarter of double-digit year-over-year increases, according to Bloomberg.
The company’s recent product updates and changes, such as live video streaming, have also made a difference in revenue - as advertising is easier than ever on the platform.
Revenue increased 24 per cent to £541m ($710.5m) in the period, more than the analyst average estimate of $697m (£531m). Net income was $100m (£76m), or 13 cents a share, compared with a loss of £88m ($116.5m), or 16 cents.
Adjusted earnings were 17 cents a share.
The increase in revenue comes as Twitter attempts to make the platform more user-friendly and a place for “breaking news.”
“We’re also continuing to make it easier for people to find and follow breaking news and events, and have introduced machine-learning algorithms that organise the conversation around events, beginning with the World Cup,” Dorsey said in a statement.
Twitter’s international revenue grew 44 per cent in the quarter, compared to a year earlier, while US sales increased 10 per cent.
Japan, the platform’s second-largest market, grew 65 per cent and generated $122m (£93m).
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