Economy

Twitter shares hammered, as bad week in social media business gets worse

Twitter shares hammered, as bad week in social media business gets worse

Twitter's EBITDA (Earnings before interest, taxes, depreciation, and amortization) was $265 million, up from $178 million past year, but critically, their monthly active users for the quarter were 335 million, down from 336 million in the first quarter.

"Twitter's value as a daily service is enhanced when the conversation on the platform is healthier and people feel safe freely expressing themselves", said Twitter CEO Jack Dorsey, while speaking on a conference call Friday.

Nonetheless, Twitter said it removed about 70 million accounts in May and June.

Twitter said it also expected user declines in the current quarter which would likely be in the "mid-single-digit millions".

Tech firms have been under pressure in several countries to be stricter over abusive content and misinformation or "fake news" as well as political influence and protection of personal data. Shares tumbled 19%, wiping out $120 billion in market cap, after the company missed revenue expectations and warned of slowing growth ahead.

The company did not reveal the number of daily users.

This is the company's third profit in a row and the third it has ever posted.

Twitter is attempting to rein in the worst offenders after years as one of the Wild West corners of the internet. But investors were focused on Twitter's lackluster user metrics: Its monthly user base dropped by 1 million sequentially, to 335 million worldwide, as Twitter continues efforts to eliminate fake accounts and reduce harassment on the platform.

Twitter, like other social media platforms, says it's putting the "health" of its platform over user growth. Twitter's relations with advertisers have been strained by concerns about phony accounts bought by users to boost their following.

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The company's chief financial officer, Ned Segal, wrote on Twitter earlier this month that most of the deleted accounts are never counted in the company's user metrics.

The social media company had quarterly revenue of $711 million, above the $692.2 million analysts were expecting, while adjusted earnings per share came in at $0.17, equivalent to what analysts polled by Thomson Reuters were expecting.

Twitter's user numbers overshadowed the company's impressive earnings.

Investors showed concern, sending the stock down 16% to $36 as trading began this morning.

Average U.S. MAUs were 68 million for Q2, flat with the year-earlier period and down from 69 million in Q1.

Now, Twitter said Friday, it's struggling to maintain users users too, a day after Facebook said it saw a user drop in Europe.

Costs related to licensing video and powering automated analysis of user data increased overall expenses 10 percent to $631 million in the second quarter compared with a year ago.

Dorsey told analysts Twitter had a "solid quarter" and suggested that daily usage was a better measure of its future growth.