Twitter loses $33 million due to Elon Musk deal

Elon Musk gives up on buying Twitter, and company threatens to sue billionaire
Image source: Biography.com

Twitter has unveiled the financial results for the second quarter of 2022. According to the social network this Friday (22), the company recorded a net loss of $ 270 million. In addition, the company revealed that it spent $33 million due to the agreement with Tesla and SpaceX CEO Elon Musk.

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This is the first financial report published by the company since Elon Musk expressed interest in buying the social network in April. However, the agreement was refused by the executive on July 8. Now the two sides are facing a long-running legal dispute, which already has a trial scheduled for October.

No wonder, the report points out when talking about costs and expenses, which increased by 31% compared to the same period last year. Indeed, of the US$1.52 billion, US$33 million was allocated to the “ongoing acquisition of Twitter”. Expenses related to terminations amounted to US$19 million.

Twitter blames Elon Musk and ads for revenue decline

The executive appeared several times in the report. This is the case for sales of $1.18 billion (a decrease of 1%). According to the company, the result reflects “the headwinds in the advertising industry associated with the macro environment, as well as the uncertainty related to the imminent acquisition of Twitter by a subsidiary of Elon Musk”.

The report even contains a section titled “Elon Musk Transaction”. Recalling the key points of the agreement, the social network stressed that “Musk’s alleged dismissal is invalid and unfair, and the merger agreement remains in force”. Subsequently, the company made some remarks about the case :
“The adoption of the merger agreement by our shareholders is the only remaining regulatory approval or condition for the completion of the merger in accordance with the merger agreement,” they said. “The exact timing of the completion of the merger, if any, cannot be predicted because the merger is subject to ongoing litigation, the adoption of the merger agreement by our shareholders and the satisfaction of the remaining closing conditions.”

Twitter reported a net loss of $270 million

Twitter, however, did not make a profit in the second quarter of 2022. On the contrary, the social network recorded a net loss of $ 270 million. In the second quarter of 2021, the social network made a net profit of $ 66 million.

The operating loss amounted to US$344 million, resulting in an operating margin of -29%. In the same period last year, the operating profit was US $ 30 million.
The number of monetizable daily active users (mDAU), on the other hand, has increased. According to Twitter, in the second quarter of 2022, the social network registered 237.8 million, an increase of 16.6% compared to the same period last year. The international average was 196.3 million, an increase of 17%.

Benedict Onyeka

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