Twitter Shares Plunge 16% After User Numbers Slip

Posted July 28, 2018

Twitter recently removed or suspended a number of accounts, which the firm said was one reason behind the fall in monthly users to 335 million in the second quarter. Both companies are suffering from similar issues involving fake accounts, charges of information manipulation by governments and individuals and rising concern about their impact on society.

Twitter's user woes are similar to those of Facebook Inc., which also has been plagued by manipulation, robot accounts and unrest about the growing influence of social media in the culture.

Shares in Twitter slumped 16 percent in pre-opening trades in a market jittery following a weak outlook from social network leader Facebook.

Twitter would like to do more work on using machine learning to serve active users more relevant content and help newcomers find what interests them so they stay with the service.

The quarter marked the first time overseas revenue contributed the majority of Twitter's total advertising sales.

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Twitter turned in its third straight quarter of profitability for Q2 of 2018, beating Wall Street expectations for revenue and earnings. The company said those daily participants on the site increased 11 percent from a year earlier, marking the seventh consecutive quarter of double-digit year-over-year increases.

Twitter shares took a pounding on Friday after it reported a decline in its user base, extending a stock market bloodbath for what had been a sizzling social media sector.

Twitter is attempting to rein in the worst offenders after years as one of the Wild West corners of the internet.

User rates have always been more of a struggle for Twitter, and investors are anxious that the company can't grow its advertising business without a larger audience.

Twitter said its monthly user number could continue to fall in the "mid-single-digit millions" in the third quarter.

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Twitter again touted daily active user growth.

Twitter has purged users and shareholders alike. The US grew just 10%, and brought in $US367 million.

Twitter is fighting against spam, bots and trolls along with rivals like Facebook and YouTube, which all face public scrutiny over how their platforms have been manipulated by bad actors.

The number of people on Twitter fell during the three months ending in June as it worked to clean up the platform and comply with new privacy regulations. Analysts had expected 340 million monthly active users in the third quarter, according to Thomson Reuters I/B/E/S.

Profit was $100 million, with a $42 million boost due to a tax benefit. Its per-share earnings of 17 cents met consensus estimates. The company said in April that monthly active user growth could be "negatively impacted" by the new rules. "We simply don't see the product improvements having a dramatic impact on Twitter's ability to attract new users". "Last year's Q2 created an incredible buying opportunity in the stock".

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The drop in Twitter's share price comes a day after Facebook's shares fell 19% when it revealed it had lost 3 million users in Europe since the Cambridge Analytica data breach scandal and the introduction of strict European Union privacy laws.