Twitter Loses Users, But Will Advertisers Follow?

Fredrick Soto
July 28, 2018

More than $6bn (£4.6bn) has been wiped off the market value of Twitter after the social media service reported a drop of 1 million users after it finally took action to delete fake and offensive accounts. The company told investors in its second-quarter earnings announcement that the drop in users reflected "impact from decisions we have made to prioritise the health of the platform".

Brian Wieser at Pivotal Research Group said efforts to curb fake accounts "should be viewed positively because these efforts improve Twitter's position with regulators and with advertisers, who see the user base as higher quality when purges occur". Worldwide ad revenue grew 40%, to $308 million - the first time non-U.S. sales represented the majority of total ad revenue.

Twitter's stock plunged Friday after it reported a decline in its monthly users and warned that the number could fall further in the coming months. The company said in April that monthly active user growth could be "negatively impacted" by the new rules. However, the company is facing the same slow user growth that is plaguing Facebook.

Profit was $100m, marking Twitter's third quarter in a row of profits.

The company did not reveal the number of daily users.

But a lingering concern has been the stalled user base, with Twitter struggling to move beyond its core group of celebrities, journalists and politicians.

Twitter said that when it suspends accounts, many of them have already been excluded from its MAU or DAU tallies, "either because the accounts were already inactive for more than one month at the time of suspension, or because they were caught at signup and were never included in MAU or DAU".

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

Chief executive Jack Dorsey said the results reflect investments "in the long-term health" of Twitter, noting efforts to weed out violence and inappropriate behavior.

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

Twitter turned in its third straight quarter of profitability for Q2 of 2018, beating Wall Street expectations for revenue and earnings. Non-GAAP earnings of 17 cents per share were in-line with estimates. Bloomberg LP produces TicToc, a global breaking news service for Twitter's site.

"We are proud of the tangible improvements people are seeing on Twitter".

Twitter escalated its battle against suspicious accounts late a year ago in the face of congressional and public pressure following revelations about how Russian Federation used the platform to spread disinformation to shape the 2016 presidential campaign in favour of Republican Donald Trump and against Democrat Hillary Clinton. Ad sales hit $601 million, a 23 percent jump year over year, and profits were up 14 percent to $100 million.

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