Twitter stock tumbles by over 20% after revealing declining growth of MAUs

Twitter stock drops by 20.56% on Friday, following the company’s report of weak guidance and decline in the growth of monthly active users, barely 24 hours after Facebook suffers its worst single-day share tumble.

After expunging about 70 million phony accounts in the months of May and June respectively, Twitter user base witnessed a huge decline, though Twitter chief financial officer Ned Segal said: “most of those (expunged accounts) were excluded from the reported metrics because they were not active on the platform for 30 days or more”.

Twitter had also in recent times deactivated and removed fake Twitter accounts, a move that is close on the heels of the wrap of the second quarter and hence does not affect the monthly active users, which this report lays emphasis on. But Twitter had hinted a further decline in the number of monthly active users by next quarter.

As captured in a letter from Twitter to its shareholders:”As a result of our health work, decisions not to renew or move to paid SMS carrier relationships in certain markets, and our decision to allocate resources towards GDPR and health, MAU could decline on a sequential basis in Q3, based on our current level of visibility, we expect the decline to be mid-single-digit millions of MAU.”

Even though the daily active users increased by 11 percent, Twitter was not specifically clear on the exact number, though it had reported 336 million monthly active users for the last quarter. As of the time the bell went off on Friday, Twitter had reported its second-quarter earnings: 17 cent earnings per share, revenue of $711 million and 335 monthly active users. The figures showed that Twitter performed even better than estimation by analysts, except the total number of monthly active users where FactSet and StreetAccount estimated higher; 338.5 million MAUs.

Twitter puts stock-based compensation expenses to hover between $300 million to $350 million for a whole year, a reduction from a range of $350 million to $450 million as previously expected. The capital expenditure is put to be between the range of $450 million to $500 million, an increase from a previous estimate of $375 million to $450 million. Twitter issued weak guidance as well, with adjusted EBITDA between $215 million and $235 million for the third quarter.

Twitter gave reasons for the setback

Having moved to paid SMS carrier relationships in certain markets where users have better access to Twitter or Twitter Lite, making changes to improve the “health” of the platform and some impact from GDPR, a set of regulations in the European Union intended to protect consumer data, was what Twitter anchors on as reasons for the setback. Twitter estimates a total of about a whopping three million accounts to have been affected by the above-mentioned reasons.

However, Twitter revenue increased by 24% year-over-year, with aggressive advertising gains. Raking in a whopping $601 million from its advertising revenue which is an impressive 23 percent increase between years. Twitter also recorded increases in its data licensing and other revenue churning businesses which stood at about 29 percent between years.

Anna Domanska
Anna Domanska is an Industry Leaders Magazine author possessing wide-range of knowledge for Business News. She is an avid reader and writer of Business and CEO Magazines and a rigorous follower of Business Leaders.

Leave a Reply

Your email address will not be published.

Recent Posts

Bill Ackman on Inflation: The Fed Will Hike Interest Rates

Bill Ackman on Inflation: The Fed Will Hike Interest Rates

Last month, the hedge fund manager suggested that only aggressive monetary tightening or a collapse in the economy will do the trick. He stated that the markets will recover if the
20 hours ago
Cadillac’s Luxury Electric Vehicle Starts At $300,000

Cadillac’s Luxury Electric Vehicle Starts At $300,000

The Lyriq is the headliner for Cadillac as it is the first of GM’s brands to go all-electric by 2030.The Celestiq will not roll off GM’s usual factories, rather it will be
24 hours ago
Juul Products Banned – Will The FDA Win The Battle?

Juul Products Banned – Will The FDA Win The Battle?

In a written statement, FDA Commissioner Robert M. Califf stated, “Today’s action is further progress on the FDA’s commitment to ensuring that all e-cigarette and electronic
3 days ago
The Mark Cuban Cost Plus Drug Company Takes on Big Pharmas

The Mark Cuban Cost Plus Drug Company Takes on Big Pharmas

Commonly used generic drugs are available at a 15% markup, plus a $3 dispensing fee and $5 shipping fee. In an interview with PBS News, Cuban told the host that the Mark Cuban phar
3 days ago
The Brookfield Global Transition Fund Promises Net Zero Returns

The Brookfield Global Transition Fund Promises Net Zero Returns

According to a written statement issued by the company, they have already deployed $2.5 billion to fund decarbonization technologies in the US, the UK, Germany, and North America.
3 days ago
Network Configuration Error Causes Cloudflare Outage Across 19 Locations

Network Configuration Error Causes Cloudflare Outage Across 19 Locations

The Cloudflare outage was most problematic for users of Cloudflare’s DNS lookup service. “Customers attempting to reach Cloudflare sites in impacted regions will observe 50
4 days ago