Twitter shares plunge 19% reflecting Facebook’s woes
Twitter shares have plunged the most in two years after the social media company said monthly users dropped by one million in the second quarter from the first and predicted further declines as it continues to fight against spam, fake accounts, and malicious rhetoric.
Twitter’s user woes are similar to those of Facebook, which also has been plagued by manipulation, robot accounts and unrest about the growing influence of social media in the culture.
Twitter chief executive Jack Dorsey has said his priority is to reduce abusive conversations on the platform and the company said that its machine-learning algorithms are identifying more than nine million potential spam or automated accounts a week.
Monthly active users were 335 million, it said.
Though that measure was up 2.8% from a year earlier, the company expects monthly visitors to fall again in the current period.
Twitter blamed the projected drop on intensified efforts to clean up the platform, stricter privacy rules in Europe and changes to the way its service is used through SMS messaging.
“We are confident that this is in the best long-term interest of the platform and will enable long-term growth as we improve the health of the public conversation on Twitter” and reallocate resources, including those used to prepare for the data privacy changes in Europe, Twitter said in a note to shareholders accompanying the earnings release.
The market appeared unwilling to wait and see. The shares closed down 20%, the biggest decline since October 2016.
It is now worth $26.97bn (€23.06bn).
Twitter reported net income for the third consecutive quarter, which has helped drive the shares 79% higher this year before the shares plunge yesterday.
However, the company gave a forecast for third-quarter earnings before interest, taxes, depreciation, and amortisation of up to $235m (€201m), falling short of analysts’ average estimate of $268m.
The huge number of deletions have raised concerns among investors that Twitter which is the favorite communications tool of US president Donald Trump can’t attract a more general audience to supplement the politicians, entertainers, and journalists who are among its prime users.
The company, however, said the vast majority of malicious accounts are inactive or caught before they become counted among active users.
Some analysts saw the purge as a good sign.
