Editor/
Social media giant Twitter posted a worse-than-expected loss today in its first earnings report since billionaire Elon Musk backed out on a deal to buy the company.
The result was reportedly fueled in part by the massive uncertainty around the firm’s fate as it embarks on a potentially lengthy legal battle with the world’s richest person.
According to Forbes, San Francisco-based Twitter reported revenue of $1.2 billion in the second quarter, falling short of average analyst estimates calling for $1.3 billion and slipping 1% from the same period 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’s market value stands at $30 billion today, roughly 22% below Musk’s proposed takeover bid.
In its earnings release, Twitter blamed the disappointing performance on advertising industry headwinds associated with broader economic concerns and uncertainty around Musk’s deal to buy Twitter and take it private.
The firm says it’s not hosting an earnings call, issuing a shareholder letter or sharing financial projections with the deal still in flux.
Twitter also disclosed it spent about $33 million related to the acquisition in the second quarter and $19 million on costs associated with layoffs, including some affecting about a third of the firm’s recruiting team.
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%.
Twitter stock has been on a wild ride since Musk acquired a 9% stake in the firm in April, announced a bid to acquire it at a massive premium weeks later, and then decided he was “terminating” the deal earlier this month.
Shares skyrocketed as much as 60% as the deal gained traction, but soon started collapsing as Musk voiced concerns about fake and spam accounts on the platform. Though Twitter’s board had already approved the takeover, Musk backed out on July 8, pushing shares down nearly 40% from their April highs.
On July 12, Twitter’s board sued Musk for backing out of the deal, asking a Delaware judge to order the billionaire to move forward with the agreement. The trial is being scheduled for October, according to Twitter.
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.
0