Sandwiched between Musk and Snap, Twitter’s Wednesday shareholder meeting was a tough one.
In an ominous sign for Twitter, Snap responded to the company’s second-quarter profit warning issued Monday night with a 43 percent plunge in its stock price on Tuesday.
Twitter shares fall more than 5% after Snap profit warning
While the Snap storm has left many companies reliant on digital advertising in trouble, with Facebook owner Meta losing $50 billion in market value and Google parent Alphabet losing nearly $60 billion, the two tech giants have stronger roots and a wider range of customers , and a few big brands have less exposure. For example, Facebook and Instagram sucked ad revenue from small businesses, while Google sucked up search advertising.
However, Twitter is very similar to Snap, both of which derive their revenue from branded advertisers. To complicate matters, Snap is growing faster.
In the first quarter of this year, Snap’s revenue rose 38% year-on-year to $1 billion, and daily active users rose 18% year-on-year to 332 million. By contrast, Twitter’s revenue grew at half the rate of Snap’s in the first quarter, and the company recalculated its active user data for past quarters, found it to be overstated, and adjusted the totals.
Musk’s $44 billion deal is on shaky ground as Twitter’s share price falls further, and it is holding off on an offer pending more data on fake accounts from Twitter boss Parag Agrawal.
Shares in Twitter, which have fallen 16 percent so far this year, fell 5.5 percent to $35.76 after Snap announced a profit warning on Tuesday, well below Musk’s $54.20 offer, according to Reuters Breakingviews calculations. is about 30% likely.
Sandwiched between Musk and Snap, Twitter’s Wednesday shareholder meeting is tough
Shareholders will be eager to hear comments from management on whether the company’s ad revenue will be affected as much as Snap next quarter after Snap cut its guidance on Wednesday, ahead of its shareholder meeting. This will be especially important amid uncertainty about Musk’s acquisition.
Twitter recently fired two executives and froze hiring in response to macroeconomic conditions and uncertainty surrounding acquisitions.
The buyout has now been suspended, and for Musk, the fall in Twitter’s share price presents an opportunity to negotiate a lower price.
According to “Barron’s”, investment bank Wedbush analyst Daniel Ives believes in a research report that Snap’s performance guidance has intensified market pressure on technology stocks and may prompt Twitter’s board to accept a lower offer.
Ives added that a lower offer might be a better option for Twitter than remaining independent while trying to fight Musk over the withdrawal of the offer and assuage investor concerns about user metrics.
Given Musk owns the largest stake in the company, investors will be watching closely whether Musk will attend the shareholder meeting virtually or otherwise.
A Twitter spokesman said Wednesday’s annual shareholder meeting will not include a vote on the pending acquisition. The company plans to hold a special shareholder meeting at a later date to vote on the acquisition, but this has not been confirmed.
edit/irisz
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