Twitter's share price dropped almost 20 percent after the earnings report, matching a similar decline in Facebook's stock after its earnings report showed challenges ahead, partly a result of confronting toxic elements, too.
Twitter on Friday reiterated its efforts to "to invest in improving the health of the public conversation" on its platform, making the "long-term health" of its service a priority over short-term metrics such as user numbers.
Twitter's share price fell as much as 18% after the company reported a quarter-over-quarter decline in monthly active users. But Chief Financial Office Ned Segal told analysts that the event, which carried into the third quarter, raked in less revenue in its second two weeks. Analysts had expected 340 million monthly active users in the third quarter, according to Thomson Reuters I/B/E/S. Shares of Twitter declined more than 16 percent in trading before the opening bell.
"Our second quarter results reflect the work we're doing to ensure more people get value from Twitter every day", Dorsey said. The company told investors in its second-quarter earnings announcement that the drop in users reflected "impact from decisions we have made to prioritise the health of the platform". Global ad revenue grew 40%, to $308 million - the first time non-U.S. sales represented the majority of total ad revenue.
Twitter again touted daily active user growth.
The number of people using Twitter on a monthly basis was down by one million on the previous quarter at 335 million.
Twitter's user woes are similar to those of Facebook Inc., which also has been plagued by manipulation, robot accounts and unrest about the growing influence of social media in the culture. The one million loss came from users in the United States, the company said.
Profit was $100 million, with a $42 million boost due to a tax accounting move.
Wall Street was looking for Q2 earnings of 17 cents a share with $696.2 million in revenue.
"Investors are overreacting to (monthly active user) trends", BTIG analyst Richard Greenfield said about the share fall.
Twitter escalated its battle against suspicious accounts late a year ago in the face of congressional and public pressure following revelations about how Russian Federation used the platform to spread disinformation to shape the 2016 presidential campaign in favour of Republican Donald Trump and against Democrat Hillary Clinton. "Last year's Q2 created an incredible buying opportunity in the stock". Twitter reports in USA dollars. So far this year, more than 40 million suspicious accounts were detected, the company said in June.
The drop in Twitter's share price comes a day after Facebook's shares fell 19% when it revealed it had lost 3 million users in Europe since the Cambridge Analytica data breach scandal and the introduction of strict European Union privacy laws. Twitter also earns revenue from licensing its data.