Twitter lost $270 million in Q2 because of Elon Musk? Know more

Twitter on Friday said it posted $270 million net loss in the second quarter (Q2), largely owing to uncertainty related to the pending acquisition by Tesla CEO Elon Musk that adversely hit its advertising business.

Musk has terminated the $44 billion Twitter deal over the presence of bots on the platform and Twitter has sued him for cancelling the deal, with the trial now set for October in a US court.

In its Q2 earnings, Twitter said that its Q2 revenue totalled $1.18 billion, a decrease of 1 per cent year-over-year, "reflecting advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Musk".

When excluding MoPub and MoPub Acquire, year-over-year growth was 3 per cent, it added.

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Twitter’s ad revenue totalled $1.08 billion, and subscription and other revenue totalled $101 million.

The Q2 average monetizable daily active usage (mDAU) was 237.8 million, up 16.6 per cent compared to Q2 of the prior year.

The increase was driven by ongoing product improvements and global conversation around current events, said Twitter.

The company said that given the pending acquisition of Twitter by Musk, "we will not host an earnings conference call, issue a shareholder letter, or provide financial guidance.

The company also cited ‘uncertainty’ over the acquisition by Musk.

Twitter is holding no calls with analysts and will not publish a letter to shareholders, as is the norm, because of the pending acquisition.

The underlying numbers at Twitter, however, were good. The number of daily active users rose 16.6% to 237.8 million compared with the same period a year before.

Those numbers are particularly impressive in the wake of a quarterly earnings report late Thursday from the social media company Snap.

Snap also saw advertising tumble in the high-inflationary environment and shares plunged more than 30% Friday before the opening bell.

‘When compared to the nightmare quarter of SNAP last night, it shows digital ad spending is not falling off a cliff like feared which is a positive for others in the space such as Facebook, Pinterest, and Google,’ wrote Dan Ives, who covers technology for Wedbush.

Shares of Twitter Inc. Slipped about 1% early Friday amid a broader sell-off on the tech-heavy Nasdaq composite.

The stock reaction may also be muted because the fight with Musk has overshadowed almost everything.

Twitter is attempting to force Musk to make good on his April promise to buy the company for $44 billion. Twitter last week sued Musk to complete the deal and both sides are bracing for an October courtroom trial to resolve the dispute.

The April-June fiscal quarter encompassed a tumultuous three months for Twitter, starting with the April 4 disclosure that Musk had acquired a huge stake in the company, paving the way for his takeover bid later that month.

It didn't take long for the relationship to fray as Musk publicly tweeted his concerns about Twitter and its employees and signalled he was having second thoughts.

Twitter argued in court that Musk's actions in and his ‘repeated disparagement of Twitter and its personnel’ created uncertainty that harmed Twitter's business operations, employees and stock price.

It called for an expedited trial so the company could carry on with important business decisions, while Musk sought to wait until next year because of the complexity of the case and his demands for more of Twitter's internal data about how it counts fake and automated ‘spam bot’ accounts ‘ which he's cited as a chief reason for trying to terminate the deal.

A judge this week set the trial for October, siding with Twitter's concerns that too much delay could cause the company irreparable harm.

It will be held in Delaware's Court of Chancery, which handles many high-profile business disputes, unless Musk and Twitter settle the case before then.