Twitter Posts $270 Million Loss In First Earnings Report Since Elon Musk ‘Terminated’ $44 Billion Takeover Deal

Topline

Social media big Twitter posted a worse-than-expected loss Friday morning in its first earnings report since billionaire Elon Musk backed out on a deal to purchase the corporate, fueled partly by the large uncertainty across the agency’s destiny because it embarks on a doubtlessly prolonged authorized battle with the world’s richest particular person.

The corporate blamed broader financial headwinds and uncertainty across the Musk deal for its … [+] disappointing second-quarter efficiency.

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Key Info

San Francisco-based Twitter reported income of $1.2 billion within the second quarter, falling wanting common analyst estimates calling for $1.3 billion and slipping 1% from the identical interval final yr.

The corporate additionally reported a worse-than-expected lack of $270 million, or 35 cents per share—in comparison with expectations for a lack of 7 cents per share and a revenue of $66 million within the second quarter final yr.

In its earnings launch, Twitter blamed the disappointing efficiency on promoting business headwinds related to broader financial considerations and uncertainty round Musk’s deal to purchase Twitter and take it personal.

The agency says it’s not internet hosting an earnings name, issuing a shareholder letter or sharing monetary projections with the deal nonetheless in flux.

Twitter additionally disclosed it spent about $33 million associated to the acquisition within the second quarter and $19 million on prices related to layoffs, together with some affecting a couple of third of the agency’s recruiting staff.

Twitter inventory futures had been down 2% to about $38.50 inside minutes of the announcement; shares have plunged greater than 40% over the previous yr, whereas the S&P 500 has fallen about 16%.

Key Background

Twitter inventory has been on a wild trip since Musk acquired a 9% stake within the agency in April, announced a bid to amass it at a large premium weeks later after which decided he was “terminating” the deal earlier this month. Shares skyrocketed as a lot as 60% because the deal gained traction, however quickly began collapsing as Musk voiced considerations about pretend and spam accounts on the platform. Although Twitter’s board had already accepted the takeover, Musk backed out on July 8, pushing shares down almost 40% from their April highs.

What To Watch For

On July 12, Twitter’s board sued Musk for backing out of the deal, asking a Delaware decide to order the billionaire to maneuver ahead with the settlement. The trial is being scheduled for October, in keeping with Twitter on Friday. In a word to purchasers, Wedbush analyst Daniel Ives referred to as Musk’s determination “a catastrophe situation for Twitter,” predicting a protracted authorized battle for Twitter to both drive the deal by way of or get Musk to pay a $1 billion termination penalty.