Breakingviews - Twitter purges users and shareholders alike


The company's stock tumbled 20 percent.

Snap is under pressure Friday following a rough few days for social-media companies.

The company's stock dropped more than 18 per cent to $35.03 U.S. on the New York Stock Exchange Friday morning after it reported a decline in its monthly users and warned that the number could fall further in the coming 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 posted earnings per share of $0.13 on revenue of $711 million, a 24 percent rise over the prior year.

But that wasn't enough for investors.

Twitter, like other social media companies, says it's prioritizing its platform over user growth, getting rid of abusive account. Twitter blamed the projected drop on intensified efforts to clean up the platform, stricter privacy rules in Europe and changes to the way its service is used through SMS messaging.

But a lingering concern has been the stalled user base, with Twitter struggling to move beyond its core group of celebrities, journalists and politicians. This month many high-profile Twitter users, including President Trump and former president Barack Obama, saw a significant drop in their follower counts.

The company, however, said the vast majority of malicious accounts are inactive or caught before they become counted among active users.

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Twitter has warned investors that new investments in security and safety will impact user metrics.

As for the rest of the report, the company earned an adjusted $0.17 a share on revenue of $710.5 million - beating the $0.16 and $697.3 million that analysts were expecting.

While Friday was Twitter's second-worst loss since it went public in November 2013, the stock has still doubled in value over the last 12 months.

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.

In May, Twitter said it was challenging the authenticity of 10 million potential spam accounts a week.

Twitter's user woes are similar to those of Facebook Inc., which also has been plagued by manipulation, robot accounts and unrest about the growing influence of social media in the culture. The company does not disclose daily users.

Twitter is attempting to rein in the worst offenders after years as one of the Wild West corners of the internet.

Chief executive Jack Dorsey said: "Our second quarter results reflect the work we're doing to ensure more people get value from Twitter every day".

In the meantime, Twitter's business, heavily dependent on advertising, is hanging in there.