The number of people who use Twitter every day jumped in the second quarter, when the social network negotiated a deal to sell itself to billionaire Elon Musk for $44 billion, but the company’s revenue and profit took a hit.
In the quarter ended June 30, approximately 237.8 million daily users who were able to view ads logged into the site, an increase of nearly 4% from the previous quarter and 16% from the year-ago quarter.
Despite the surge in traffic, Twitter said in its earnings report on Friday that it lost 35 cents a share, worse than Wall Street’s expected loss of 9 cents a share. Excluding certain expenses, Twitter lost 8 cents a share, down from the 14 cents a share expected by analysts polled by Thomson Reuters. Revenue was $1.18 billion, down 1% year-on-year, falling short of the $1.3 billion expected by analysts.
The lackluster performance comes as Twitter continues to battle Musk, who is trying to back out of his deal to buy the company. Twitter sued the businessman, who runs automaker Tesla and rocket maker SpaceX, to complete the deal. A judgment on the dispute is due in October in five days.
On Friday, Twitter attributed the revenue shortfall to “headwinds from the advertising industry” given the general state of the global economy and “uncertainty” related to Musk’s takeover bid. Costs related to the pending acquisition were approximately $33 million during the second quarter, the company said.
The company canceled the analyst call that is usually held after the earnings report.
Like other tech companies, Twitter is bracing for a possible recession. The company laid off nearly 100 workers in July after freezing hiring.
Social media companies are also experiencing advertising slowdowns. Some marketers are pausing advertising campaigns during the Russia-Ukraine war. Apple’s privacy changes have also made it more difficult for advertisers to track the effectiveness of their campaigns.
Twitter’s goal of reaching $7.5 billion in revenue and 315 million monetizable daily users by 2023 is likely to be harder to achieve during an economic downturn.
Twitter shares were holding up in early trading on Friday after the company posted its earnings.