Shares of Twitter Inc plunged 17% after the social media platform revealed that its monthly users fell by 1 million in the second quarter – and predicted that number would decline further.
The drop in monthly users comes as Twitter faces an increase in fake spam accounts and dangerous rhetoric on the platform.
Monthly active users are at 335 million in the current quarter, according to a statement released by Twitter on Friday, up from 336 million in the first quarter.
Despite the drop, the number of users is up 2.8% from a year ago, but Twitter expects the numbers to continue to drop as the crusade against spam accounts continues.
“Our second quarter results reflect the work we do to ensure that more people benefit from Twitter every day,” Jack Dorsey, CEO of Twitter, said in a statement. “We want people to feel safe to express themselves freely and have launched new tools to address behavioral issues that distort and hijack public conversation.”
According to Dorsey, the company’s machine learning algorithms identify more than 9 million potential spam emails or fake accounts per week.
The company also suggested that the drop is in part due to stricter privacy rules in Europe and changes in the way the service is used via SMS messaging.
Twitter reported net profit for the third quarter in a row, pushing shares up 79% this year to $ 42.94 (£ 32.75) at the close on Thursday. However, the company’s forecast for third-quarter profit before interest, taxes, depreciation and amortization of $ 235 million (£ 179 million) is lower than analysts’ average estimate of $ 268 million ($ 204 million). pounds sterling).
While Twitter is confident their efforts are in the platform’s long-term best interest, the declines have raised concerns among the company’s investors.
As President Trump’s preferred medium of communication, the fear is that the platform may not be able to attract mainstream users, according to Bloomberg.
“While Trump may be the most prominent user possible, usage has not improved significantly over the past two years,” Benjamin Schachter, analyst at Macquarie Securities, wrote to investors ahead of the release of the results.
However, Twitter doesn’t measure success by monthly visitors, but instead highlights daily active users as the best metric, which increased 11% from the previous year.
The increase marks the seventh consecutive quarter of double-digit year-over-year increases, according to Bloomberg.
Recent updates and changes to the company’s products, such as live video streaming, have also made a difference in revenue, as advertising is easier than ever on the platform.
Revenue rose 24% to £ 541million (£ 710.5million) during the period, more than the average analysts estimate of $ 697million (£ 531million) . Net profit was £ 100million (£ 76million), or 13 cents per share, compared with a loss of £ 88million ($ 116.5million), or 16 cents.
Adjusted earnings were 17 cents per share.
The increase in revenue comes as Twitter tries to make the platform more user-friendly and a place for “breaking news”.
“We also continue to make it easier for people to find and follow the latest news and events, and have introduced machine learning algorithms that organize the conversation around events, starting with the World Cup,” said Dorsey. in a press release.
Twitter’s international revenue grew 44% in the quarter, compared to a year earlier, while sales in the United States were up 10%.
Japan, the platform’s second-largest market, grew 65% and generated $ 122million (£ 93million).