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

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

Almost $7 billion was wiped off the value of Twitter yesterday after the social network said that its user base had shrunk unexpectedly in the second quarter and would continue to contract.

Twitter Inc on Friday reported fewer monthly active users than analysts expected and warned that the closely-watched figure could keep falling as it deletes phony accounts, sending shares sharply lower in early trading.

Facebook user growth was flat in North America and declined by 3 million in Europe, quarter over quarter, and still it has 2.2 billion monthly active users.

Twitter says it's putting the long-term stability of its platform above user growth.

The firm has been under pressure to suspend users for hate speech, abusive content and the spread of misinformation. Both the slower growth forecast and heavier spending reflect problems largely of Facebook's own making.

Twitter said its number of monthly users fell in the second quarter, and will likely continue to drop as it shuts down fake accounts, sending the company's stock tumbling 16% in early morning trading.

Elsewhere on the balance sheet, Twitter said total advertising revenue was $601 million, an increase of 23 percent from the previous year.

It was the second-biggest loss for Twitter's stock since the company went public in 2013.

In May, Twitter said it was challenging the authenticity of 10 million potential spam accounts a week.

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Macquarie Research analysts last week downgraded Twitter shares to "neutral" despite raising their price target for the stock to $42 from $36.

Twitter reiterated Friday that it is trying "to invest in improving the health of the public conversation" on its platform, making the "long-term health" of its service a priority over short-term metrics such as user numbers.

Company executives had acknowledged their new tactics against suspicious accounts but said the impact on active users was likely to be limited because most of the suspended accounts were either not active or newly created.

Using its new tactics, the social media company suspended more than a million accounts a day in May and June and is slated to have kept that pace through July. Its sales hit $711 million for the quarter, up 24% from the same period a year ago, and it posted its third consecutive profitable quarter.

For more from Slim, or to learn about cycle analysis, check out the askSlim Market Week show every Friday on our YouTube channel. Investors still value Facebook at $503 billion.

Looking at the rest of the numbers, Twitter posted a Q2 net income of $100 million, or 13 cents per share - a record high for the company.

Twitter's put its EBITDA guidance for the third quarter between $US215 million and $US235 million.

The World Cup brought in $30 million of revenue in the quarter.

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