Markets

Twitter shares fall 18% as number of monthly users slips

Twitter shares fall 18% as number of monthly users slips

Twitter had 335 million monthly users in the second quarter, below the 339 million Wall Street was expecting, and down slightly from 336 million in the first quarter.

Total revenue hit $711 million in Q2, up 24% year-over-year, and Twitter posted net income of $100 million (or 13 cents per diluted share), and a net margin of 14%.

Second-quarter net income hit $100.1 million, after a loss a year ago. While Twitter maintains that most of these accounts were dormant and thus not counted in the monthly user figure, the company also warned that its cleanup efforts could affect its counted user base - without giving specific numbers. Twitter reports in USA dollars.

Social media researchers for years had complained about the prevalence of bots - automated accounts managed by people seeking to shape online discourse - on Twitter, accusing the company of playing down the problem and not doing enough to curtail their influence.

The World Cup brought in $30 million of revenue in the quarter.

While monthly visitors declined, Twitter highlighted daily active users as the best measure of success.

Allegations of Russian meddling in the 2016 USA election by spreading misleading or divisive content over social media have made the issue of improving control over accounts and content critical for Twitter.

Twitter shares plunged in early trading as the social-media service reported weak user numbers, a day after Facebook suffered the biggest one-day loss in USA market history.

"We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation", CEO Jack Dorsey said in a prepared statement.

Earlier this year Twitter admitted that more than 50,000 Russia-linked accounts used its service to post automated material about the 2016 United States election.

Sales, at $711m, were up 24% compared with a year ago and above analysts estimates.

"They're cleaning up a lot of MAUs that are not good or real", said Richard Greenfield, an analyst at BTIG, referring to monthly active users. Adjusted earnings were 17 cents a share. "Last year's Q2 created an incredible buying opportunity in the stock". Twitter also earns revenue from licensing its data.

The drop in Twitter's share price comes a day after Facebook's shares fell 19% when it revealed it had lost 3 million users in Europe since the Cambridge Analytica data breach scandal and the introduction of strict European Union privacy laws. Twitter said it had benefited from ads related to the World Cup football tournament in Russian Federation.

The new capital expenditures forecast is for between $450 million and $500 million, up from $375 million to $450 million, as Twitter expands and upgrades the computer infrastructure underlying its service.

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