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Facebook and Twitter face uncertain road ahead

28 July 2018

Twitter recently removed or suspended a number of accounts, which the firm said was one reason behind the fall in monthly users to 335 million in the second quarter.

Twitter, like bigger rival Facebook Inc, has been under pressure from regulators in several countries to weed out hate speech, abusive content and misinformation, better protect user data and boost transparency on political ad spending.

But it is a necessary strategy if Twitter is to gain the trust of many advertisers. But the company gave a forecast for third-quarter earnings before interest, taxes, depreciation and amortization of as much as $235 million, falling short of analysts' average estimate of $268 million.

The Associated Press also found that Twitter suspended 56 million such accounts in the last quarter of 2017.

Almost $7 billion was wiped off the value of Twitter yesterday after the social network said that its user base had shrunk unexpectedly in the second quarter and would continue to contract.

The decline came despite Twitter's simultaneous announcement that its revenue is up a whopping 24 percent this year, and posted a record profit of $100 million.

The company did not reveal the number of daily users.

It posted its third consecutive quarter of profits.

Twitter co-founder Jack Dorsey speaks at a campaign fundraiser in New York. (AP
Twitter co-founder Jack Dorsey speaks at a campaign fundraiser in New York. (AP

Macquarie Research analysts last week downgraded Twitter shares to "neutral" despite raising their price target for the stock to $42 from $36.

Twitter said new behavioral controls meant to create more civil conversations and its efforts to purge the platform of bots are part of the reason for the drop, as are new privacy laws. They were all attacked by foreign fraudsters during the 2016 USA election looking to disrupt the online discourse and spread fake news.

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. "Twitter shares tumbled 18% in pre-market trading before paring losses amid a brutal selloff that mirrored Facebook's nosedive earlier this week", said Neil Wilson, chief market analyst at Markets.com. Google parent company Alphabet, however, is having a strong week after reported earnings on Monday.

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.

Twitter said daily active users rose 11% from a year ago, without giving a specific figure.

Twitter has doubled in value over the past year as it became profitable for the first time and investors applauded its live video efforts.

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

In April, Twitter said it inked more than 30 deals for live and original programming, including with Walt Disney Co (DIS.N) for a Twitter-only version of ESPN's SportsCenter.

US trade threats, intimidation won't ever work: China
The offshore yuan fell almost 0.6 percent to a low of 6.8448 per dollar, its weakest level since June 2017. Australian shares .axjo were off 0.1 percent while the New Zealand market .nz50 was down 0.4 percent.

Facebook and Twitter face uncertain road ahead