After paying $809.5 million to resolve a long-running lawsuit, more than $500 million was lost by the social media company Twitter in the three months ending September.
In 2015, accusations of deceiving investors about user engagement were leveled against the social media behemoth.
The quarterly sales revenues of the company increased by 7 per cent despite this one-time expense, as the company managed to avoid the impact of Apple’s privacy restrictions, which impacted rivals such as Snap and Facebook.
This resulted in a 3 per cent jump in Twitter’s stock price.
This September, Twitter decided to settle a class action was lawsuit filed by shareholders in 2016. In the lawsuit, charges that Twitter had deceived investors about the number of its users being active on the network each month and the frequency of such users seeing Twitter’s timeline.
Twitter did not concede to any wrongdoing but decided to settle the lawsuit with the cash it had on hand, and had indicated that its bottom line this quarter would be hit by the settlement amount.
The impact was obvious in the third quarter earnings report by the company as it reported a net loss of $537 million.
However, for the San Francisco-based there were some bright spots in the third quarter as well.
Apple’s privacy reforms have remarkably not affected Twitter, unlike the case of its rival Snap, which saw its stocks slump by 25 per cent last week because of the issue.
For the third quarter, Twitter reported earnings of $1.14 billion from advertising and described the Apple impact as being “minimal” because the majority of its advertisers do not depend on highly targeted advertisements.
The micro blogging site Twitter was expanding its targeted advertising business such as through the roll out of topics that users can follow on Twitter, said the company’s Chief Financial Officer Ned Segal during a conference call with analysts.
“A lot of this is opportunity that’s in front of us,” he said.
When Facebook presented its financial report earlier this week, it indicated that the Apple privacy change issue is creating “headwinds” for the company.
(Adapted from Daily-Sun.com)