Twitter shares dive into black week for social media

Washington : Twitter shares took a pounding yesterday amid a warning of a shrinking user base, extending a stock market bloodbath for what had been a sizzling social media sector. Shares in Twitter tumbled 18.7 per cent to $34.93 in midday trade despite a record profit for the short messaging service, as financial markets focused on the new realities for social media firms moving to curb abusive behavior and boost privacy.

The woes for Twitter came a day after Facebook lost an unprecedented $120 billion in market value following its earnings report, which left investors panicked over worries of cooling growth for the social network star. Twitter said it posted a best-ever profit of $100 million in the second quarter, following a loss of $116 million a year earlier. 

Revenue rose 24pc to $711 million. But the San Francisco-based firm said its base of monthly active users fell by one million from the past quarter to 335 million in the period amid a purge of fake and abusive accounts and a crackdown on “bots” that manipulate the platform. Twitter said it also expected user declines in the current quarter which would likely be in the “mid-single-digit millions.”

The drop in users comes from “prioritizing the health of the platform, and, to a lesser extent, GDPR,” Twitter said, referring to Europe’s General Data Protection Regulations that limit how internet firms can handle user data. Jennifer Grygiel, a Syracuse University professor who specializes in social media, said the market is coming to grips with a tougher picture for social media companies as they seek to curb manipulation and abusive conduct while coping with new regulations on privacy and data protection.