Twitter Blames Revenue Drop on Fight With Elon Musk

In its Q2 earnings report this morning, Twitter reported a decline in its revenue of $1.18 billion, down from $1.19 billion in 2021 earnings, blaming it on the ongoing Elon Musk acquisition saga, the company said. Twitter did not host an earnings call this time given the pending $44 billion Musk acquisition and cited “advertising industry headwinds associated with the macroenvironment as well as uncertainty related to the pending acquisition of Twitter by Elon Musk,” in its statement. The company is currently suing Musk over the incomplete merger agreement with the court trial scheduled for October this year. Although Twitter reported an increase in its ad revenue and user growth, sources question whether Twitter will be able to convince advertisers to spend more on the platform, despite the user growth, given tight ad budgets and the ongoing court battle dramas. "Twitter is on a rowboat in the middle of a storm. Meanwhile, the Musk saga rocked the boat even harder,” said Insider Intelligence principal analyst Jasmine Enberg. Snap’s Revenue Growth Slows Drastically in Q2 2022 Despite the tumultuous takeover drama, Twitter’s advertising revenue rose 2% from a year earlier to $1.08 billion. In the first quarter, advertising revenue grew 23%. And its average monetizable daily active users was $237.8 million, up 16.6% compared to year-over-year. The increase was driven by ongoing product improvements and global conversation around current events, Twitter said. “Twitter is now in the unenviable position of convincing advertisers that its ad business is solid regardless of how its court battle with Musk ends, and its Q2 earnings show that the platform has its work cut it out for it to do that,” said Enberg. “User growth may not be enough to convince advertisers to spend on Twitter, especially at a time when many advertisers’ budgets are tightened,” he added. While Twitter has a smaller user base versus rivals like Instagram, it continues to play an outsized role in culture as a real-time pulse of what’s on people’s minds, according to Forrester vp, research director Mike Proulx. To that, 21% of online adults in the U.S. indicate that Twitter is informative versus 14% who feel the same about Instagram, per Forrester's 2022 Media and Marketing Benchmark Recontact Survey. Nonetheless, “Twitter is in a kind of purgatory right now. The future of the company and the product is in question,” said Proulx. “Twitter now has an acquirer who no longer wants it, a CEO and board who wants to get rid of it and an employee base who’s caught in the middle of it all as their morale plummets," added Proulx. "None of this is good for Twitter in the short and medium term. The real victim from all of this drama is Twitter itself.”

Earnings Reports

Twitter Blames Revenue Drop on the $44 Billion Takeover Fight With Elon Musk

The company reported a loss of $270 million compared with year-ago earnings of $65.6 million

Trishla Ostwal

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Trishla Ostwal