(AP Photo/Richard Drew, File)

Twitter's Stock Plunges As Bad Week In Social Media Continues

July 27, 2018 - 10:20 am

NEW YORK (WCBS 880/AP) — Cracking down on hate, abuse and online trolls is also hurting Twitter's standing with investors.

The company's stock plunged Friday after it reported a decline in its monthly users and warned that the number could fall further in the coming months. The 20.5 percent plunge comes one day after Facebook lost 19 percent of its value in a single day — its worst trading day since Facebook went public in 2012.

Twitter, like other social media platforms, says it's putting its platform over user growth. That leaves investors seemingly unable to value what the biggest companies in the sector, which rely on their potential user reach, are worth.

Twitter had 335 million monthly users in the quarter, below the 339 million Wall Street was expecting, and down slightly from 336 million in the first quarter. That overshadowed a strong monthly user growth of 3 percent.

The company said its monthly user number could continue to fall in the "mid-single-digit millions" in the third quarter.

CNET reporter Ian Sherr noted that the assortment of scandals that have plagued social media giants over the past couple of years have not held back the financial performance of Facebook and Twitter – until now.

“Twitter actually was able to get profitable in the last couple of years, and Facebook was growing like crazy until this week. And so now, we’re seeing this kind of sudden stop of everything that was looking good financially, and investors are panicked,” he said.

Long criticized for allowing hate, abuse and trolls to run rampant on its platform, Twitter has begun to crack down, banning accounts that violate its terms and making others less visible.

Twitter is now attempting to rein in the worst offenders after years as one of the Wild West corners of the internet.

At the same time, it must convince people it's the go-to platform in social media, even though it is dwarfed right now by Facebook.

Facebook has more than 2.23 billion users while its apps WhatsApp, Instagram and Messenger each have over 1 billion.

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.

As part of these efforts, Twitter said that as of May, its systems identified and challenged more than 9 million accounts per week that are potentially spam or automated, up from 6.4 million in December 2017. The company has previously disclosed these numbers.

A Washington Post report put the total number of suspended accounts in May and June at 70 million. The Associated Press also found that Twitter suspended 56 million such accounts in the last quarter of 2017. While Twitter maintains that most of these accounts were dormant and thus not counted in the monthly user figure, the company also warned that its cleanup efforts could affect its counted user base without giving specific numbers.

"We want people to feel safe freely expressing themselves and have launched new tools to address problem behaviors that distort and distract from the public conversation," CEO Jack Dorsey said in a prepared statement.

But Sherr said the account purges have not actually been a major factor in the market loss for Twitter.

“That data was actually from locked accounts. So there’s a distinction that may not seem like it matters, but when Twitter’s going through and identifying accounts that do bad stuff – whether they are bots or spammy or whatever, or harassing – they will do what’s calling lock the account, which means it still exists on their service, but you can’t access it,” Sherr said. “So those accounts were automatically not included in the counts that they use.”

Sherr said it remains to be seen whether Twitter will rebound.

“It’s really hard to tell what the future is going to be, and part of the problem is that these types of scandals are stuff that we’ve never dealt with before, and on a scale that nobody has ever seen. I mean, together, Facebook and Twitter are larger than any country on earth,” he said. “It’s just impossible to know how this is going to play out.”

Twitter's second-quarter net income hit $100.1 million, after a loss last year during the same period. It's the company's third profit in a row, the third it has ever posted.

Per-share, the San Francisco company's net income was 13 cents, or 17 cents adjusted, in line with expectations, according to a poll by Zacks Investment Research.

Revenue of $710.5 million, up 24 percent and edging out expectations of $696 million.