Twitter posts $270 million quarterly loss as it prepares to fight Elon Musk in court
Twitter reported a quarterly loss Friday, with revenue slipping even as its number of users climbed.
The social media company's latest quarterly earnings figures offered a glimpse into how its business has performed during a months-long negotiation with billionaire and Tesla CEO Elon Musk over whether he will take over the company.
The company lost $270 million in the April-June period after revenue slipped 1% to $1.18 billion, reflecting advertising industry headwinds, as well as uncertainty" over Musk's acquisition bid.
The number of daily active users rose 16.6% to 237.8 million compared with the same period a year before. Twitter chalked up the gains to "ongoing product improvements and global conversation around current events."
"Overall we would characterize the DAU metrics as better than feared and holding up relatively firm in this environment," Wedbush analyst Dan Ives said in a note. "When compared to the nightmare quarter of SNAP last night, it shows digital ad spending is not falling off a cliff like feared which is a positive for others in the space such as Facebook, Pinterest, and Google."
Twitter's results come amid overall uncertainty for tech companies, and one day after social media platform Snap reported a revenue miss, sending its shares plunging 25%.
Legal fight looms
Overshadowing Twitter's latest sales results is its legal fight with Musk to make good on his April promise to buy the company for $44 billion. Twitter last week sued Musk to complete the deal and both sides are bracing for an October courtroom trial to resolve the dispute.
Given the pending acquisition, Twitter said it wouldn't hold its usual quarterly earnings conference call or issue a shareholder letter.
"Twitter shares right now aren't really trading on co-specific fundamentals, but instead the likelihood of the Musk deal closing, and the company has a strong case," analysts at Vital Knowledge said in a research note.
The April-June fiscal quarter encompassed a tumultuous three months for Twitter, starting with the April 4 disclosure that Musk had acquired a huge stake in the company, paving the way for his takeover bid later that month. It didn't take long for the relationship to fray as Musk publicly tweeted his concerns about Twitter and its employees and signaled he was having second thoughts.
Twitter argued in court that Musk's actions in and his "repeated disparagement of Twitter and its personnel" created uncertainty that harmed Twitter's business operations, employees and stock price.
It called for an expedited trial so the company could carry on with important business decisions, while Musk sought to wait until next year because of the complexity of the case and his demands for more of Twitter's internal data about how it counts fake and automated "spam bot" accounts — which he's cited as a chief reason for trying to terminate the deal.
A judge this week set the trial for October, siding with Twitter's concerns that too much delay could cause the company irreparable harm. It will be held in Delaware's Court of Chancery, which handles many high-profile business disputes, unless Musk and Twitter settle the case before then.
Shares slid 2% before the opening bell Friday.