Twitter Posts $270 Million Loss In First Earnings Report Since Elon Musk ‘Terminated’ $44 Billion Takeover Deal - Social Media Explorer
Twitter Posts $270 Million Loss In First Earnings Report Since Elon Musk ‘Terminated’ $44 Billion Takeover Deal
Twitter Posts $270 Million Loss In First Earnings Report Since Elon Musk ‘Terminated’ $44 Billion Takeover Deal
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Topline

Twitter suffered a more severe than anticipated loss Friday morning, its first earnings report after billionaire Elon Musk pulled out of a deal. The uncertainty over the fate of Twitter’s future as it enters into a long legal battle with one the richest people in the world was fueling the fear.

Here are some key facts

Twitter, a San Francisco company with $1.2 billion revenue reported in its second quarter. This was lower than the average analyst estimate of $1.3 billion. It also fell 1% from last year.

The company also reported a worse-than-expected loss of $270 million, or 35 cents per share—compared to expectations for a loss of 7 cents per share and a profit of $66 million in the second quarter last year.

Twitter blamed its disappointing results on the advertising industry headwinds that were associated with wider economic concerns as well as uncertainty surrounding Musk’s purchase of Twitter.

However, the company says that it will not host an earnings call or issue a shareholder note.

Twitter revealed that it had spent $33 million in second-quarter acquisition costs and $19million on layoffs. This included about one third of its recruiting staff.

Twitter stock futures were down 2% to about $38.50 within minutes of the announcement; shares have plunged more than 40% over the past year, while the S&P 500 has fallen about 16%.

Important Background

The Twitter stock market has experienced a rollercoaster ride ever since Musk purchased a 9.9% stake in the company in April. Musk then announced an offer to purchase it for a huge premium weeks later, and later decided that he wanted to “terminate” the deal. As the deal became more popular, shares rose to 60%. However, they soon began to fall as Musk raised concerns about spam and fake accounts. Shares fell nearly 40% since April’s highs, even though Twitter board had approved the acquisition. Musk however resigned on July 8.

Keep an eye out for these things

The board of Twitter sued Musk on July 12 for pulling out of the deal. They asked a Delaware judge, however, to allow Musk to proceed with the agreement. Twitter announced Friday that the trial was scheduled for October. In a note to clients, Wedbush analyst Daniel Ives called Musk’s decision “a disaster scenario for Twitter,” predicting a long legal battle for Twitter to either force the deal through or get Musk to pay a $1 billion termination penalty.

Big Number

$30 billion. Twitter’s current market value was $30 billion on Friday. This figure is roughly 22% lower than Musk’s takeover proposal.

Continue reading

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Adam
Adam is an owner at Nanohydr8. He really loves comedy and satire, and the written word in general.

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