Twitter Shares Crash 17% Amid Mass Conservative Censorship

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As Facebook's stock plummet 19 percent, erasing around $120 billion in value, Twitter seems to be next in line as shares crashed 17% following censorship of conservatives voices on the platform.

The company reported Q2 adjusted EPS 17c, but a massive slow down in US ad growth, rising only 9%, is beginning to signal the beginning of the end for Twitter.

Another spook in the market was when the 335 million actives users saw a decline of 1 million from the prior quarter largely in the US.

Macquarie's Benjamin Schachter said:

"Despite Trump being perhaps the most high-profile user possible, usage has not dramatically improved over the past couple years. We simply don't see the product improvements having a dramatic impact on Twitter's ability to attract new users.''

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According to Zerohedge: He's right: the following long-term chart of user growth shows just how much it has slowed down in recent quarters.

And while the company does not disclose its DAUs, it was kind enough to report that there was an 11% growth there.

Here is how Twitter explained the drop in its monthly active users:

"Average MAUs were 335 million for Q2, an increase of 9 million year-over-year and a decrease of 1 million quarter-over-quarter, reflecting impact from decisions we have made to prioritize the health of the platform, to not move to paid SMS carrier relationships in certain markets and, to a lesser extent, GDPR.In aggregate, these factors reduced MAU by more than 3 million in Q2."

Things only got worse in the company's forecast, where Twitter now expects 3Q EBITDA would drop sharply to $235 million, falling short of estimates of $268 million.

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But the biggest negative catalyst was that Twitter expects the MAU decline to accelerate in Q3, and "to be mid-single-digit millions of MAU":

As a result of our health work, decisions not to renew or move to paid SMS carrier relationships in certain markets, and our decision to allocate resources towards GDPR and health, MAU could decline on a sequential basis in Q3.

Based on our current level of visibility, we expect the decline to be mid-single-digit millions of MAU. As a reminder, DAU growth continues to be the best measure of our success in driving the use of Twitter as a daily utility.

Then there was the expense side, where Twitter said it still expects to increase headcount 10% to 15% in 2018 - a la facebook - with hiring focused on health, audience and engagement growth, ad products and sales.

The company also sees 2018 capital spending $450m-$500m (375-400 expected).

By this point investors, had had enough, and spooked by what happened to Facebook, decided to sell and ask questions later, sending the share price down between 15 and 20%: