First Facebook, now Twitter as stock crashes 20pc

Ann Santiago
July 28, 2018

Shares of Twitter Inc. are down 16 percent.

Twitter is fighting against spam, bots and trolls along with rivals like Facebook and YouTube, which all face public scrutiny over how their platforms have been manipulated by bad actors. Trump on Thursday accused Twitter of "shadow banning" prominent conservative voices.

Twitter's aggressive moves to clean up the platform has not detracted from its advertising revenue, said the social network's chief financial officer Ned Segal during a conference call. They cited concern that while the stock was up 45% this year when Macquarie published its note, the fake-account purge won't bring "dramatic impacts on Twitter's ability to attract new users", arguing that "valuation will likely limit upside from current levels".

In April, Twitter said it inked more than 30 deals for live and original programming, including with Walt Disney Co (DIS.N) for a Twitter-only version of ESPN's SportsCenter.

Twitter said it expects monthly active users to decline in Q3, as well.

Almost $7 billion was wiped off the value of Twitter yesterday after the social network said that its user base had shrunk unexpectedly in the second quarter and would continue to contract.

Monthly active users fell by 1 million in the second quarter from the first to 335 million.

Revenue of $711 million, mostly from advertising and up 24 percent from previous year, exceeded the average estimate of $696 million among analyst research aggregated by Thomson Reuters.

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

At the same time, it must convince people it's the go to platform in social media, and it is absolutely dwarfed right now by Facebook.

The news comes after Facebook lost more than US$100 billion in value following a disappointing earnings report on Wednesday.

As part of these efforts, Twitter said that as of May, its systems identified and challenged more than 9 million potentially spammy or automated accounts per week, up from 6.4 million in December 2017. The company doesn't disclose the total number of daily users.

Tech firms have been under pressure in several countries to be stricter over abusive content and misinformation or "fake news" as well as political influence and protection of personal data.

The company said it expected monthly user numbers to continue to fall in the third quarter.

"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 the company's Friday earnings statement.

Facebook user growth was flat in North America and declined by 3 million in Europe, quarter over quarter, and still it has 2.2 billion monthly active users.

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