Twitter’s stock plunges on weak user numbers

Twitter Plunges Most in Four Years

Twitter Plunges Most in Four Years

Bad earnings news and questions about future prospects decimated shares of Facebook Inc. Twitter shares tumbled 19 per cent to $34.75 in afternoon trading, marking their biggest one-day drop since October 6, 2016.

Twitter's loses comes a day after Facebook made stock market history as it lost an unprecedented $120 billion in market value following its earnings report that sent investors into a panic over cooling growth for the social network.

Twitter's second-quarter net income hit $100.1 million, after a loss previous year during the same period.

The micro-blogging platform reported $711 million in revenue - an increase of 24 per cent year-over-year.

On Friday, the social media network said its monthly users during the second quarter reached 335 million across the globe, which were down from the prior quarter of 336 million.

Twitter said the decline in the third quarter would be in the mid-single-digit millions, suggesting a sequential decline to around 330 million users.

Twitter says it's putting the long-term stability of its platform above user growth. "It was a golden child of Wall Street", Ives says. Jennifer Grygiel, a Syracuse University professor who specializes in social media, said the market is coming to grips with a tougher picture for social media companies as they seek to curb manipulation and abusive conduct while coping with new regulations on privacy and data protection.

According to her, "What you're seeing is a market correction as the industry adjusts for increased operational expenses as governance and ethical business expectations have been raised globally. What has changed is that the public and regulators are no longer buying into (the) rhetoric and myths that social media is too big to moderate".

Twitter and Facebook are trying to reduce the amount of abuse and hate speech on their platforms, but that's affecting their growth, one of the things investors value the most.

Dorsey noted that Twitter is investing in "new tools to address problem behaviors that distort and distract from the public conversation".

In an investor call on Friday, Twitter's chief financial officer Ned Segal said the monthly user decline was due to the company's effort to clean up fake accounts on the platform at a rate of several million per day.

The Twitter network claimed in May that their systems determined that more than 9 million of its accounts per week were most likely automated ones or spam.

Twitter shares have more than doubled over the past year as it shows signs of sustaining profitability after years of losses.

Twitter's dip in user numbers renewed old concerns that its audience will be forever stalled around the 300 million mark.

Allegations of Russian meddling in the 2016 United States election by spreading misleading or divisive content over social media have made the issue of improving control over accounts and content critical for Twitter. "As a reminder, DAU [daily active users] growth continues to be the best measure of our success in driving the use of Twitter as a daily utility", the statement said.

Facebook has more than 2.23 billion users while its apps WhatsApp, Instagram and Messenger each have over 1 billion.

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