Twitter reported a decline in the number of users

It wasn't just Facebook that had a bad second quarter: Twitter on Friday reported a decline of 1 million users, predicting an even bigger drop in the near future. Twitter explains: such an outflow of subscribers is a consequence of the fight against spam, fake accounts and aggressive rhetoric of some users. The market reacted negatively to the company's quarterly report - Twitter shares fell by more than 17%.

Details

• At the end of the second quarter, the number of users of the social network decreased from 336 million to 335 million. Attributing this reduction in the service’s audience to enhanced measures to “cleanse” the platform of unwanted users and the tightening of European legislation in the field of protection, the social network made it clear that it intends to continue to act in the same spirit in the future, considering this the key to long-term growth in the future. According to CEO Jack Dorsey, the priority now is to reduce the volume of insults on the social network.
• Twitter uses artificial intelligence algorithms to identify more than 9 million potentially malicious accounts every week. The company claims that most of the accounts being deleted are either inactive or discovered before they are even noticed by active users.
• Analysts fear that the social network has exhausted its growth opportunities. “Even though [US President Donald] Trump is the platform's most popular user, the social network hasn't improved much in recent years,” said Benjamin Scacter, an analyst at Macquarie Securities. "We simply don't see product innovation impacting Twitter's ability to attract new users."
• The fall in shares was not stopped even by the fact that the company ended the third quarter in a row with a net profit. It is thanks to this that earlier this year Twitter shares rose in price by almost 80%. However, the company's forecast for the third quarter was lower than analysts' expectations - only $235 million instead of the expected $268 million.

Context

• During the main trading in New York, Facebook's capitalization on Thursday collapsed by almost 20% - to $504 billion. Thus, in one day the company fell in price by more than $120 billion. This is a record daily fall in the entire history of the American stock market. The previous one - a $90 billion drop in a day - belonged to Intel, but this happened back in September 2000, when the dot-com bubble burst.
• One of the main reasons for investor disappointment was the decline in Facebook's profitability. At the end of last year, its profitability was about 57%, now it is 44%, and by the end of the year it could drop to about 35%.

Liana Faizova