Twitter Inc., in one of its last earnings reports before Elon Musk takes the company private, reported revenue that missed analysts’ estimates, reflecting a slowdown in advertising.
According to the company’s Twitter account, revenue rose to $1.2 million in the first quarter. According to Bloomberg data, this is a significant increase over the $1.23 trillion average forecast. According to Bloomberg data, the 16% sales increase was the slowest in six quarters. It is consistent with Snap Inc. reports and Meta Platforms Inc. reports, both of which have reported that they are dealing with lower advertising spend due to problems with supply chains and inflation as well as the ongoing war in Ukraine.
Twitter announced a 16% increase of daily active users to 229m, beating the estimates of 226.4m. The stock was little changed at $48.93 in premarket trading, given Musk’s agreement earlier this week to buy the company for $54.20 per share.
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Twitter set previously a goal for Twitter to have 315,000,000 daily users by 2023. It also hoped to increase revenue by $7.5 billion per year by that time. Twitter would need to increase its user base by 86 millions over the next seven quarterly periods, an average 12.3million per quarter. In 2021, the company had 25 million new users.
On Thursday, Twitter said it was withdrawing all “previously provided goals and outlook.”
In addition, it was disclosed by the company that it had made a mistake in its calculation of daily users during three years. In the fourth quarter of 2021, for example, Twitter’s reported user total of 216.6 million daily users was 1.9 million users too high.
Twitter has found itself the subject of much of the conversation on its own platform in recent weeks as Musk’s $44 billion bid to buy the company has played out in public. The billionaire has his own ideas about how to improve the 16-year-old social networking site, which he has promised to turn into an unfettered free-speech zone, a move that he has said is “essential to a functioning democracy.”
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The outspoken entrepreneur with 86 million followers has hinted at a long list of changes he wants to make, while at the same time casting doubt on the advertising model that accounts for the bulk of Twitter’s revenue. He’s on record as saying he’s not in it for the money. “I don’t care about the economics at all,” Musk said at a TED conference when the deal was announced. Some believe Musk could be pushing harder for a new business model like subscriptions. Twitter currently offers a $3 monthly subscription service for the site’s most active users, and also makes some money through a data licensing business.
While Twitter’s financial prospects may not be a priority for the world’s richest person, Musk still has much riding on Twitter’s success since he is financing $21 billion out of his own pocket. Twitter posted earnings per share (EPS) of 61 cents during the first three month of this year.
Reaching an agreement earlier this week was the culmination of a months-long saga that saw Musk amass 9% of Twitter’s shares; launch a fusillade of criticism at Twitter’s management; rebuff an invitation to join the company’s board; and then announce an offer that many people first construed as a weed joke.
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Once the deal closes, however, Musk may no longer have to answer to Wall Street but he will have other constituents to please, including employees who keep Twitter’s engines running, and users. His promise to ease content-moderation policies may be a welcome change for some people, but it has alarmed Black, Muslim, LGBTQ+ and other groups who have voiced worry about increased harassment on the platform and has caused concern among advertisers who are brand conscious and wouldn’t want their ads to show up next to controversial posts.
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Due to the pending sale, Twitter didn’t hold an analysts’ call to discuss the results or issue a shareholder letter.
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