Twitter Stock Drops More than 18% in Morning Trading

Twitter share price tumbles after it loses 1m users in three months

Twitter's share price fell as much as 18% in early trading on Friday after the company reported a quarter-over-quarter decline in monthly active users.

Twitter is fighting against spam, bots and trolls along with rivals like Facebook and YouTube, which all face public scrutiny over how their platforms have been manipulated by bad actors.

Segal said the efforts to improve accounts along with other factors had a negative hit to monthly active users of 3 million in the quarter, which compares with the 1 million net decline, but added that efforts to improve quality of the accounts would take an even bigger bite out of third-quarter monthly users. The reports sparked concerns about how fast the companies can continue growing amid mounting scrutiny and plateauing user numbers.

Twitter said it posted a profit of $100 million in the second quarter as revenue rose 24 percent to $711 million.

Revenue was $710.5 million in the period, which beat Street forecasts. The company has previously disclosed these numbers. It's the company's third profit in a row, the third it has ever posted. Both companies are suffering from similar issues involving fake accounts, charges of information manipulation by governments and individuals and rising concern about their impact on society.

According to Twitter, new tools to address "behaviors that distort and distract from the public conversation" introduced in Q2 have resulted in a 4% drop in abuse reports from search and 8% fewer abuse reports from conversations.

As part of these efforts, Twitter said that as of May, its systems identified and challenged more than 9 million potentially spammy or automated accounts per week, up from 6.4 million in December 2017. Analysts polled by Thomson Reuters had expected an adjusted income of 17 cents per share on almost $697 million in revenue.

Twitter shares tumbled 19 percent to $34.75 in afternoon trading, marking their biggest one-day drop since October 6, 2016. Markets outside the United States grew 44% year on year to $344 million.

U.S. President Donald Trump, an avid Twitter user, on Thursday slammed the company for restricting the visibility of prominent Republicans, but provided no evidence to back the claims. In Q2, daily active users increased 11% year-over-year, with double-digit growth in five out of its top 10 global markets.

Twitter said it lost some users due to the introduction of the General Data Protection Regulation in Europe in May but it did not note any revenue impact.

Twitter also saw usage fall after saying it would not subsidize messaging fees for users who accessed its app through text messages.

Sales, at $711m, were up 24% compared with a year ago and above analysts estimates.

Twitter said that when it suspends accounts, many of them have already been excluded from its MAU or DAU tallies, "either because the accounts were already inactive for more than one month at the time of suspension, or because they were caught at signup and were never included in MAU or DAU".

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