Twitter Inc reported a swing to a loss in the fiscal 2022 second quarter, compared with a profit in the prior-year period. The company’s top and bottom lines also missed Wall Street estimates. Furthermore, the micro-blogging platform provider also failed to meet users’ growth forecasts.
The San Francisco, California-based social media platform reported second-quarter revenues of $1.18 billion, a decrease of 1% from $1.19 billion in the comparable quarter of fiscal 2021.
Twitter cited industry-centered issues linked to the overall difficult economic scenario as the reason for the drop in revenues.
For the second quarter, which ended June 30, 2022, Twitter posted a net loss of $270.01 million, or $0.35 per share, compared with a net income of $65.60 million, or $0.08 per share, in the quarter ended June 30, 2021.
The company’s costs (and other expenses) surged 31% y-o-y to $1.52 billion.
Excluding Stock-based compensation expense, amortization of acquired intangible assets, and gain on investments in privately-held companies, among others, Twitter posted a Q2 2022 adjusted net loss of $57.73 million, or $0.08 per share, compared with an adjusted net income of $174.52 million, or $0.20 per share in Q2 2021.
Analysts surveyed by Refinitiv had anticipated the company would report earnings of $0.14 per share on revenues of $1.18 billion. The reported revenue, which was 11% below analysts’ estimates, reflected the largest revenue miss in the history of Twitter.
Furthermore, the reported adjusted loss is the first one for the company in two years and only the second since going public.
The average monetizable daily active users (mDAU) rose by 16.60% y-o-y to 237.80 million in the second quarter, but missed the 238.08 million forecast by Refinitiv analysts. The increase was primarily driven by continuing product enhancements.
In particular, the average US mDAU increased by 14.70% y-o-y to 41.50 million. Likewise, the average international mDAU surged 17% to 196.30 million.
Segment wise,
- Advertising revenues inched up 2% to $1.08 billion.
- Subscription and other revenue were $101 million, down 27% from last year.
During the quarter, the company spent $33 million on the pending Twitter acquisition. Twitter also recorded severance-associated expenses of $19 million.
Twitter has filed a case against Tesla CEO Elon Musk in relation to the suo moto cancelation of the takeover deal valued at $44 billion. The court proceedings are scheduled to begin in October.
In April, Twitter approved Elon Musk’s takeover bid of $54.20 per share in cash and get un-listed (privately held) from the market. Nevertheless, a month later, Musk put the takeover process on hold and raised doubts about fake accounts on the platform.
Eventually, earlier this month, the legal team of Elon Musk walked away from the deal, alleging that Twitter did not provide adequate information regarding fake accounts.
As the issue is now in court, Twitter refrained from issuing guidance for the current (third) quarter. The company also avoided hosting the routine conference call with analysts after the declaration of quarterly results.
The quarterly earnings and revenue miss, coupled with legal issues, are expected to keep the stock bearish in the short term.
The historical price chart indicates that the stock of Twitter is facing resistance at 40. The next support is anticipated at or near 29. Additionally, the stock is trading below its 50-day moving average while the MACD indicator is showing a negative reading. Therefore, we anticipate the stock to remain in a downtrend in the short term.
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