Twitter posts miss Q2 earnings, partially blaming Elon Musk for fiasco

Twitter earnings for the June quarter of 2022 fell short of Wall Street estimates — a 1% decline — with the company blaming in part Elon Musk’s attempt to exit its acquisition business. The social network also posted a net loss during the period, while investors expected Twitter to be in the black in the second quarter.

Revenue for the second quarter totaled $1.18 billion, down 1% year over year. This reflected “ad industry headwinds related to the macro environment” — as well as “uncertainty surrounding Musk’s upcoming acquisition of Twitter,” the company said. Twitter expenses increased 31% for the quarter, resulting in a net loss of $270 million (or an adjusted net loss of 8 cents a share) compared to a net income of $66 million in the year-ago period.

Twitter’s findings come amid the legal battle with Elon Musk, in which Twitter is demanding the world’s richest person honor his $44 billion takeover deal. A judge in the Delaware Court of Chancery scheduled October for a trial to hear Twitter’s case against Musk.

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According to financial data provider Refinitiv, analysts expected Twitter to report second-quarter revenue of $1.34 billion and adjusted earnings of 14 cents a share.

Twitter’s second-quarter average monetizable daily active user rose 8.8 million sequentially to 237.8 million, a 16.6% increase year over year. Average mDAUs in the U.S. were 41.5 million in the second quarter, up 14.7% from the prior-year period.

Shares of Twitter fell 2% to below $39/share in premarket trading when the second quarter was announced. Musk had offered $54.20/share for Twitter.

Twitter alleged in its lawsuit against Musk that the tech mogul had “repeatedly belittled Twitter and the deal, creating business risk for Twitter and downward pressure on the stock price.” Musk claims he needs a review of Twitter’s claim that fake and spam accounts account for less than 5% of DAUs; Twitter’s lawyers say Musk only has buyer’s remorse and acted in bad faith.

Obviously, Musk can’t take all the blame for Twitter’s results. On Thursday, Snapchat’s parent company, Snapchat, reported second-quarter results that fell short of already reduced expectations, telling investors that hiring would be “significantly” amid a slowdown in sales. “Demand growth on our advertising platform has slowed significantly,” Snap said, saying it’s seeing increasing competition for shrinking advertising budgets.

Twitter has not provided forward-looking guidance, hosted a conference call on the second-quarter results, or provided an investor letter to discuss the results. As with reporting first-quarter results, the company cited “the pending acquisition by an Elon Musk-affiliated company.”