Twitter shares plunge as monthly active users decline

Twitter shares plunge as monthly active users decline

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

The user outlook came as Twitter reported higher-than-expected revenue thanks to the FIFA World Cup driving ad demand, strength in video ads and booming global ad revenue.

Twitter said in a blog post in early July that weeding out accounts would not hurt metrics because the accounts would mostly be inactive.

The quarter marked the first time overseas revenue contributed the majority of Twitter's ad sales.

The drop echoed that of Facebook on Thursday, when its shares ended down almost 19 percent after the company said spending to improve privacy and slower user growth in big markets would hit margins for years. It doesn't disclose DAUs but said those remain well below 50% of monthly active users.

Twitter said daily active users rose 11 percent from a year ago, without giving a specific figure. Twitter reports in US dollars.

The company also warned MAUs could go down even more next quarter due to a combination of account removals, GDPR compliance changes, and its decision to not move to paid SMS carrier relationships in certain markets.

The decline came despite Twitter's simultaneous announcement that its revenue is up a whopping 24 percent this year, and posted a record profit of $100 million. Analysts polled by Thomson Reuters had expected an adjusted income of 17 cents per share on almost $697 million in revenue.

RBC Capital Markets analyst Mark Mahaney said in an upbeat note this week that Twitter is "one of the largest and most influential social networks" and provides "meaningful value to users".

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"We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviours that distort and distract from the public conversation, " CEO Jack Dorsey said in a prepared statement.

Social media researchers for years had complained about the prevalence of bots - automated accounts managed by people seeking to shape online discourse - on Twitter, accusing the company of playing down the problem and not doing enough to curtail their influence.

Twitter turned in its third straight quarter of profitability for Q2 of 2018, beating Wall Street expectations for revenue and earnings.

In the meantime, Twitter's business, heavily dependent on advertising, is hanging in there. Adjusted earnings were 17 cents a share.

Twitter escalated its battle against suspicious accounts late previous year in the face of congressional and public pressure following revelations about how Russian Federation used the platform to spread disinformation to shape the 2016 presidential campaign in favour of Republican Donald Trump and against Democrat Hillary Clinton.

Like Facebook, Twitter is working to comply with the General Data Protection Regulation, which took effect in Europe in the second quarter.

The new capital expenditures forecast is for between $450 million and $500 million, up from $375 million to $450 million, as Twitter expands and upgrades the computer infrastructure underlying its service.

"We are proud of the tangible improvements people are seeing on Twitter", the firm said.

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