Twitter Says It's Losing Money Because Of Elon Musk

Twitter logo is seen on a smartphone with Elon Musk in the background
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News & Politics
Damir Mujezinovic

Billionaire Elon Musk, considered to be the richest man in the world, offered in April to buy the social networking company Twitter for $44 billion.

Twitter accepted Musk's offer, but the founder of Tesla and SpaceX gradually backed out, formally terminating the deal last month.

Though Musk's decision hardly came as a surprise to analysts and Silicon Valley watchers, the whole ordeal has apparently had an impact on Twitter's business.

Twitter Revenue

According to CNN, Twitter reported its earnings for the second quarter on Friday, revealing that it missed earning expectations.

The social media company reported revenue of $1.18 billion, a one percent decline from the previous year, and said that its ad sales dropped in part thanks to "uncertainty" regarding Musk's offer.

Twitter also noted that sales declined due to the current macroeconomic environment, indicating that tech giants -- and the advertising industry -- are feeling the effects of inflation, which is the highest it's been in four decades.

Twitter's User Base

The Twitter app is shown on a smartphone screen
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In other areas, Twitter's performance improved.

The social network's user base grew considerably in the second quarter, with the number of active daily users increasing by 16 percent.

This, too, is tied to Musk's decision to pull out of the deal he himself made. The billionaire has long accused Twitter of refusing to disclose the real number of bots and fake accounts on its platform.

However, some analysts believe there is no evidence Twitter is full of bots, and claim Musk is simply making excuses because he has buyer's remorse.

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Because it is involved in a legal dispute with Musk, Twitter did not provide financial guidance for the upcoming quarter.

Twitter filed a lawsuit against Musk earlier this month, in an attempt to force him to respect the deal the two parties made back in April.

William Savitt, an attorney for Twitter, told ABC News this week that Musk is now trying to delay court proceedings in order to increase his leverage or abandon the agreement completely without having to pay a fine.

'Attempted Sabotage'

Twitter logo, Elon Musk's face, and dollar bills
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Savitt also accused Musk of deliberately sabotaging the acquisition he agreed to earlier this year.

"The company is faced with substantial increasing risk specifically by the overhanging of the merger agreement -- and it's by design," the attorney told ABC News.

"Mr. Musk has been and remains contractually obligated to use his best efforts to close this deal. What he's doing is the exact opposite of best efforts. It's attempted sabotage," he added.