In the conflict with Elon Musk, Twitter remains economically fragile

Twitter's stock price has plummeted nearly 25% in less than three months, falling below its January level.  On the New York Stock Exchange in New York on July 22.

More bad news for Twitter. In a dispute with Elon Musk, the company presented disappointing quarterly results on Friday, July 22nd. Despite a growing number of active users, which now stands at 237.8 million (+16% in one year), financial revenues are declining.

Also read: Article reserved for our subscribers After Elon Musk’s announcement of his refusal to buy on Twitter, the impression of a huge mess is spreading

In the second quarter, the social network’s revenue was $1.18 billion, down 2%, while expenses rose to $1.52 billion (+31%). The company now reports a net loss of $270 million compared to a profit of $66 million for the same period in 2021.

Also read: Twitter: who are its users?

To explain these poor performances, Twitter points to the shortfall related to the resale of its MoPub management, but also the 33 million spent on the company’s – now stalled – sale process to Elon Musk. While the two parties agreed on April 25 for an amount of $44 billion, the Tesla boss decided to abandon his offer on July 8.

The overwhelming majority of his activity is advertising

These results once again shed a harsh light on the fundamental problem: the company’s business model has almost never allowed it to make money. It took twelve years before the first profits were reported in 2018. 2021 ended with a net loss of $221 million (due primarily to class-action lawsuit costs). With a turnover of 5 billion dollars, Twitter has significantly lower revenues than a competitor like Meta (Facebook, Instagram).

Also read: Twitter or the difficult economic model of social networks

The overwhelming majority of his activity is advertising. At $1.08 billion in the second quarter, it was up just 2% (up from 22% in fiscal 2021). The company is particularly suffering from the changes introduced by Apple in late 2020 to limit the tracking of internet users on iPhones, making it harder to target and measure ads. The macroeconomic context (war in Ukraine, inflation) is also weighing on advertiser spending.

Another problem: the social network hasn’t found a viable growth driver. Its mainline is Twitter Blue, a paid version of the application available in the United States, Canada, Australia and New Zealand for $2.99 ​​per month. In particular, it allows you to correct or cancel your tweets immediately after their publication and access certain articles without advertising on partner media sites (Washington Post, United States today, Etc.). Apparently not enough to attract a large audience: During the quarter “Subscriptions and Other Revenue” fell 27% to just $101 million.

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Kaddouri Ismail

I am Ismail from Morocco, I work as a blogger and online marketer. I am also the founder of the “Mofid” site, in which I constantly publish many important articles in the field of technology, taking advantage of more than 5 years of experience working in the field. I focus on publishing in a group of areas, the most important of which are programming, e-marketing, digital currencies and freelance work.

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