Twitter Posts $270 Million Loss In First Earnings Report Since Elon Musk ‘Terminated’ $44 Billion Takeover Deal

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Twitter suffered a more severe than anticipated loss Friday morning, its first earnings report after billionaire Elon Musk pulled out of a deal. The uncertainty over the fate of Twitter’s future as it enters into a long legal battle with one the richest people in the world was fueling the fear.

It blamed wider economic uncertainties and headwinds around the Musk deal as the reason for the company’s failure to achieve its goals. … [+] disappointing second-quarter performance.

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Here are some key facts

Twitter, a San Francisco company with $1.2 billion revenue reported in its second quarter. This was lower than the average analyst estimate of $1.3 billion. It also fell 1% from last year.

The company also reported a worse-than-expected loss of $270 million, or 35 cents per share—compared to expectations for a loss of 7 cents per share and a profit of $66 million in the second quarter last year.

Twitter blamed its disappointing results on the advertising industry headwinds that were associated with wider economic concerns as well as uncertainty surrounding Musk’s purchase of Twitter.

However, the company says that it will not host an earnings call or issue a shareholder note.

Twitter revealed that it had spent $33 million in second-quarter acquisition costs and $19million on layoffs. This included about one third of its recruiting staff.

Twitter stock futures were down 2% to about $38.50 within minutes of the announcement; shares have plunged more than 40% over the past year, while the S&P 500 has fallen about 16%.

Important Background

The Twitter stock market has experienced a rollercoaster ride ever since Musk purchased a 9.9% stake in the company in April. Musk then announced an offer to purchase it for a huge premium weeks later, and later decided that he wanted to “terminate” the deal. As the deal became more popular, shares rose to 60%. However, they soon began to fall as Musk raised concerns about spam and fake accounts. Shares fell nearly 40% since April’s highs, even though Twitter board had approved the acquisition. Musk however resigned on July 8.

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The board of Twitter sued Musk on July 12 for pulling out of the deal. They asked a Delaware judge, however, to allow Musk to proceed with the agreement. Twitter announced Friday that the trial was scheduled for October. In a note to clients, Wedbush analyst Daniel Ives called Musk’s decision “a disaster scenario for Twitter,” predicting a long legal battle for Twitter to either force the deal through or get Musk to pay a $1 billion termination penalty.