In conflict with Elon Musk, Twitter remains economically fragile

More bad news for Twitter. Mired in its dispute with Elon Musk, the company presented disappointing quarterly results on Friday July 22. Despite a growing number of active users, which now stands at 237.8 million (+16% in one year), its financial revenues are in decline.

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In the second quarter, the social network’s revenues stood at 1.18 billion dollars (1.15 billion euros), down 2%, while expenses soared to 1.52 billion dollars ( + 31%). The firm is now posting a net loss of $270 million against a profit of $66 million for the same period in 2021.

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To explain these poor performances, Twitter points to the shortfall linked to the resale of its MoPub management, but also the 33 million spent in the – now hampered – process of selling the company to Elon Musk. While the two parties had agreed on April 25 on an amount of 44 billion dollars, the boss of Tesla decided to give up his offer on July 8.

The overwhelming majority of its activity is advertising

These results once again shed harsh light on its fundamental problem: the business model of the company has almost never allowed it to make money. It took twelve years to post its first profits, in 2018. It ended 2021 with a net loss of $221 million (notably due to the cost of a class action). With a turnover of 5 billion dollars, Twitter has much lower revenues than a competitor like Meta (Facebook, Instagram).

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The overwhelming majority of its activity is advertising. With 1.08 billion dollars in the second quarter, it only increased by 2% (compared to 22% in the 2021 financial year). The firm is suffering in particular from the changes put in place by Apple at the end of 2020 to restrict the tracking of Internet users on iPhones, which hampers the targeting and evaluation of advertisements. The macroeconomic context (war in Ukraine, inflation) is also weighing on advertisers’ spending.

Another problem: the social network has not found a viable growth driver. Its main track is Twitter Blue, a paid version of the application available for $2.99 ​​per month in the United States, as well as in Canada, Australia and New Zealand. In particular, it allows you to correct or cancel your tweets just after their publication, and to access certain articles without advertising, on partner media sites (washington post, USA Today, etc.). Apparently insufficient to attract a large audience: during the quarter, “subscriptions and other income” fell 27% to just $101 million.

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