Snap is getting caught up in the social-media carnage (SNAP)

28 July, 2018, 20:18 | Author: Lora Ball
  • 26 2018 shows the exterior of Twitter headquarters in San Francisco California. Twitter shares took a pounding Friday as a warning of a shrinking user base overshadowed news of a third straight quarterly profit. ( AFP

Twitter is nosediving after it said monthly users declined in the second quarter and could fall further over the next few months.

Twitter now has 335 million monthly active users, compared to the 336 million it had in Q1.

Twitter on Friday reiterated its efforts to "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. The company said its "value as a daily utility is enhanced when the conversation on the platform is healthy and people feel safe expressing themselves freely and openly".

This week big tech stocks have been in the spotlight after Amazon was boosted thanks to record results in the second quarter, but Facebook warned of less rosy future growth, which led to a almost 20% fall in its share price. They cited concern that while the stock was up 45% this year when Macquarie published its note, the fake-account purge won't bring "dramatic impacts on Twitter's ability to attract new users", arguing that "valuation will likely limit upside from current levels".

The company's stock has risen 79% this year to $42.94. While Twitter maintains that most of these accounts were dormant and thus not counted in the monthly user figure, the company also warned that its cleanup efforts could affect its counted user base - without giving specific numbers.

Revenue of $711 million, mostly from advertising and up 24 percent from past year, exceeded the average estimate of $696 million among analyst research aggregated by Thomson Reuters.

Twitter's second-quarter net income hit $100.1 million, after a loss a year ago during the same period.

Twitter co-founder Jack Dorsey speaks at a campaign fundraiser in New York. (AP
Twitter co-founder Jack Dorsey speaks at a campaign fundraiser in New York. (AP

Twitter raised its 2018 capital spending forecast and said adjusted EBITDA margins in the third quarter would be below the second quarter's. It doesn't disclose DAUs but said those remain well below 50% of monthly active users.

Twitter again touted daily active user growth.

In April, Twitter said it inked more than 30 deals for live and original programming, including with Walt Disney Co (DIS.N) for a Twitter-only version of ESPN's SportsCenter.

Long criticized for allowing bad behavior to run rampant on its platform, Twitter has begun to crack down, banning accounts that violate its terms and making others less visible. Shares tumbled 19%, wiping out $120 billion in market cap, after the company missed revenue expectations and warned of slowing growth ahead.

The service's plethora of product updates and push into live video streaming have made Twitter less cumbersome to use, driving advertising revenue and profit in the second quarter.

Earnings excluding items were 17 cents per share, in-line with analyst estimates. Ad sales hit $601 million, a 23 percent jump year over year, and profits were up 14 percent to $100 million.

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