Twitter stock drops on user decline
Twitter reported a decline in monthly active users Friday, another sign of trouble for President Donald Trump’s favored social network, which has struggled in recent months to tackle accusations of political bias and eliminate vast numbers of fake accounts.
The company, which had appeared to be undergoing a surprising resurgence, said it generated $711 million in revenue in its most recent quarter. That was 2 percent above the expectations of analysts and about 24 percent more than the same period a year ago.
But those figures were overshadowed by Twitter’s announcement that its monthly active users had fallen to 335 million in the second quarter, 1 million fewer than in the previous three-month period.
The results drove Twitter’s stock down 12 percent in premarket trading, one day after investors dumped Facebook shares after the company’s disappointing quarterly earnings.
Like Facebook, its much bigger and far more profitable social media competitor, Twitter has been roundly criticized for allowing misinformation and other types of misbehavior to spread on its platform. It also has been accused by Trump and other Republicans of trying to mute conservative voices.
Analysts had warned that the social network’s campaign to get rid of so-called bot and spam accounts could hurt user growth. In what has been called the Twitter Purge, the company axed 70 million suspicious accounts over a period of several months as it tried to assure advertisers that the numbers it reported represented real users of its platform.
Before its earnings were released Friday, Twitter executives had disputed the notion that cracking down on bogus accounts could hurt revenues, arguing that many of those suspicious accounts were already excluded from its user tallies.
Twitter reported its third consecutive profitable quarter Friday, with net income of $100 million in the most recent three months, compared with a loss of $116 million in the same period a year ago. Trump is the most prominent user of the service, having turned to the social network to rail against the media, promote his Americafirst agenda and even make public the firing of his secretary of state.
“Investors aren’t going to care much about policies with respect to accounts threatening nuclear annihilation — because Trump is such an engaged presence, there’s a commercial consideration,” said Brian Wieser, a senior analyst at Pivotal Research who specializes in the technology sector.
But the declining user numbers speak to a fear among analysts that some of Twitter’s other prominent figures are becoming exhausted by the social media platform. Over the past year, celebrities like Alec Baldwin and journalists like the New York Times’ Maggie Haberman have — at least temporarily — quit the service, noting the divisiveness that can be rampant there.
“From a long-term investors’ perspective, it would be a good thing to address this,” Wieser said. “It will start to matter.”