With Elon Musk’s Takeover Looming, Twitter Tops Q1 Estimates for User Growth and Income

Twitter, which this week accepted a deal to go private in a $44 billion sale to Elon Musk, reported income a touch lighter than Wall Street predicated in the first quarter of 2022. But the social network blew away forecasts on earnings and user growth.

Q1 revenue was $1.20 billion, up 16% year-over-year, reflecting “headwinds associated with the war in Ukraine,” according to Twitter. Net income came in at $513 million, representing and diluted earnings per share of 61 cents.

Twitter boosted daily average monetizable daily active usage — its proprietary metric it calls “mDAU” — to 229.0 million for Q1, up 16% versus Q1 in the prior year and a sequential net gain of 14.3 million. Average US mDAU was 39.6 million for Q1, up 6.4% compared to Q1 of the prior year.

Wall Street on average expected Twitter to report $1.22 billion in revenue and earnings of 3 cents per share, according to Refinitiv. Analysts were looking for 226.9 million monetizable DAUs in Q1, per StreetAccount.

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After agreeing to the Musk deal on Monday, Twitter canceled its previously scheduled Q1 earnings call.

“Given the pending acquisition of Twitter by Elon Musk, we will not be providing any forward looking guidance, and are withdrawing all previously provided goals and outlook,” the company said Thursday.

Twitter’s stock closed at $48.64/share Wednesday — 10% below the $54.20/share buyout price offered by Musk. That gap indicates some investor belief that Musk’s deal for Twitter could potentially be blocked by regulators or otherwise fail to be consummated. The terms of the agreement include a $1 billion breakup fee if either side backs out.

Twitter was backed into a corner by Musk, who within a whirlwind span of three weeks went from disclosing a 9.2% stake in the company to making a $44 billion unsolicited bid after securing financing for the massive deal — one the board effectively was forced to accept on April 25 in the absence of other options.

Musk, the mercurial tech titan who heads Tesla and SpaceX, has said he wants to allow more free-wheeling speech on Twitter, raising fears he could weaken the company’s policies banning misinformation and hate speech. He also wants to push Twitter toward a subscription model, away from advertising, as well as enact changes including authenticating “all human” users and open-sourcing Twitter’s algorithms “to increase trust.”

Under the terms of the agreement, Musk is barred from posting tweets that “disparage” the social network or its employees. On Tuesday, Musk criticized Twitter’s top lawyer, Vijaya Gadde, for the 2020 decision to freeze the account of the New York Post, after the paper published stories about Hunter Biden. “Suspending the Twitter account of a major news organization for publishing a truthful story was obviously incredibly inappropriate,” Musk tweeted.