Just one day after Facebook suffered the biggest single-day market cap loss in history, Twitter also saw its share price plummet by more than 20 percent. The social media company had beaten or at least met Wall Street expectations for the second quarter in terms of revenue and profit, but a slight decline in monthly active users compared to the previous quarter was enough to send its shares tumbling.
Twitter blamed the user decline partly on new European privacy rules and partly on its ongoing efforts to improve the platform itself and limit the spread of hate speech or misinformation. "We continue to invest in improving the health of the public conversation on Twitter, making the service better by integrating new behavioral signals to remove spammy and suspicious accounts and continuing to prioritize the long-term health of the platform over near-term metrics," the company wrote in its letter to shareholders.
The fact that Twitter
has struggled to attract new users for years now probably explains why its repeated failure to do so is such a red flag for the company’s shareholders. If it weren’t for that, it’d be hard to explain the drastic market reaction to second quarter results that weren’t as bad as a 20 percent price drop suggests.