Twitter blames Musk’s aborted takeover attempt for $270m loss
TWITTER has blamed Elon Musk’s stalled $44bn (£36bn) buyout and “advertising industry headwinds” after it plunged to a $270m loss.
Sales at the social media company dropped 1pc in the second quarter to $1.18bn, missing analyst forecasts. The heavy loss in the period compared to a $66m profit a year earlier.
Twitter blamed “advertising industry headwinds associated with the macroenvironment, as well as uncertainty related to the pending acquisition of Twitter by an affiliate of Elon Musk”.
The billionaire Tesla chief struck a deal to buy Twitter in late April before backing out earlier this month. Twitter is now suing Mr Musk to force him to go through with the deal.
Preparing for the takeover and then dealing with its collapse has taken up large amounts of management time at Twitter over the last few months.
Mike Proulx, research director at Forrester, said the company was in “a kind of purgatory right now”.
“Twitter now has an acquirer who no longer wants it, a CEO and board who wants to get rid of it, and an employee base who’s caught in the middle of it all as their morale plummets,” he said.
Mr Musk has publicly criticised Twitter’s management and signalled plans to make sweeping changes had he gone through with the deal. The Tesla boss made it clear he would replace Parag Agrawal as Twitter’s chief executive.
News of Mr Musk’s attempted takeover prompted one staffer to write “I feel like I’m going to throw up” in a company chatroom.
Earlier this week a judge granted Twitter’s request for a fast-track trial to try to force Mr Musk to complete his takeover.
Scheduled for October, a trial in Delaware will decide whether Mr Musk’s acquisition vehicle can be made to “specifically perform their obligations under the merger agreement” and buy the company, regardless of his wish to back out. Experts think it is unlikely the court will force Mr Musk’s camp to consummate the deal.
The Tesla chief pulled out of the deal earlier this month, citing the number of fake and spam accounts on the social media service.
Twitter’s advertising business, which makes up 91pc of its total revenue, grew from $1.04bn in the second quarter of 2021 to $1.08bn in its latest financial results.
The company also added 8.8m active users during the quarter for a total of 196m during the three month period.
Twitter shares in New York dropped 1pc on the update.
Dan Ives, an analyst at Wedbush Securities, said of Twitter’s latest results: “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.”