The global pandemic and U.S. protests are forcing a pullback by advertisers on Twitter, but it’s also led to an unprecedented surge of users.

Average daily user growth spiked 34% in the second quarter, the company said Thursday, the largest jump in users ever recorded by the company.

In an earnings call, CEO Jack Dorsey addressed an embarrassing hacking incident last week that compromised the accounts of high profile users, saying he felt “terrible” about it.

Shares of San Francisco-based Twitter bounced 4% higher in Thursday trading.

But the company took a huge tax hit to earnings, posting a net loss of $1.2 billion, or $1.56 per share, in the April-June period, compared with profit of $1.1 billion, or $1.43 per share, a year earlier.

Revenue fell by about a fifth to $683 million, far short of the $702 million Wall Street had expected, according to a survey of analysts by FactSet.

Twitter’s advertising business was hit harder than its larger rivals Google and Facebook, and analysts had expected the bleeding to continue in the second quarter. The company said ad revenue made a “gradual, moderate recovery” relative to levels in March but many brands then slowed or paused their spending in late May to mid-June, following the outbreak of Black Lives Matter protests in the U.S.

“We continue to see headwinds from lower global advertising demand due to COVID and civil unrest,” Dorsey said.

Ad revenue fell 15% in the last three weeks of June, which was better than the 27% decline in the final three weeks of March, with advertiser demand returning as the protests subsided, Chief Financial Officer Ned Segal said in the earnings call.

New users have been flocking to the platform as they isolate, with the number of daily active users jumping to 186 million.

“Twitter’s strength as a news and entertainment source has helped buoy engagement during the pandemic as housebound consumers use the platform for real-time news and information,” said eMarketer analyst Jasmine Enberg. But she does not expect this to continue as stay-at-home restrictions begin to lift and people start returning to more normal routines.

Investors have been waiting for Twitter to explore new revenue options — and offering paid subscriptions is one long-floated idea. Dorsey said the company is exploring this and other options, although he said the process is in the “very very early stages.”

“Most importantly we want to make sure that any new line of revenue is complementary to our advertising business. We do think there is a world where subscription is complementary,” he said in a conference call with analysts, according to a transcript. “We think there’s a world where commerce is complementary. You can imagine work around helping people manage payrolls as well that we believe is complementary.”

He said Twitter will likely begin testing these new ideas this year.

The earnings were overshadowed by the continuing fallout from a hack last week that targeted 130 accounts, including world leaders, celebrities and tech moguls, that appeared designed to lure their Twitter followers into sending money to an anonymous Bitcoin account. The company revealed more details Wednesday, saying hackers accessed the direct message inboxes of 36 accounts, including an elected Dutch official. It didn’t identify the official but Dutch anti-Islam lawmaker Geert Wilders said it was him.

“Last week was a really tough week for all of us at Twitter,” Dorsey said. “We feel terrible about the security incident that negatively affected the people we serve and their trust in us.”

Twitter executives deflected questions on another challenge: a social media ad boycott running for at least the month of July, and therefore not counted in the second quarter. Facebook is the primary target of the boycott by hundreds of advertisers over its policies and actions on hate speech and misinformation. Its effect on Twitter is less clear, with some advertisers pausing ads on all social media, though some analysts believe some ad dollars could be redirected away from Facebook to Twitter.

US President Donald Trump appears as the first result of suggested accounts when users type "racist" into Twitter's people search, it emerged Wednesday.

The result, reported by the British news outlet The Independent and verified by AFP, highlights the intense discord around the president.

Trump has more than 80 million followers, although there is much dispute about how many of them are genuine, active human Twitter users.

Analysts said the news suggests Trump opponents, more than critics of any other Twitter account, have been labeling him as racist, although the social media giant itself did not confirm this was the case.

Trump has been facing heightened criticism for his comments during protests over police brutality but has always dismissed suggestions that he is racist.

Twitter offered little in the way of explanation, pointing out only that its search algorithms may reflect what is happening on the platform.

Trump, in the midst of a heated war with social media over what he claims is bias, recently signed an executive order calling for more oversight of internet platforms, a move which could prove difficult to enforce.

Greg Sterling, a contributing editor at the website Search Engine Land, said the result suggests that "so many people are using the words 'racist' or 'racism' to respond to or describe Donald Trump, or there's a concerted effort to associate Trump's account with those terms."

Evidently, it is also possible that a large number of supporters defending Trump from charges of racism would also use the word 'racist' in their replies.

Sterling said Twitter's ranking algorithm for individual tweets "uses a variety of signals, including how recently the tweet was published, its relevance (personalization), user engagement with the tweet, the presence of rich media (such as video or images) and several other variables."

The analyst noted however that in 2007, a concerted effort known as "Google bombing" was able to manipulate search results for then-president George W. Bush to associate him with the term "miserable failure" on the search engine until the flaw was corrected.

Kjerstin Thorson, a Michigan State University politics and social media professor, said it would require a detailed analysis to understand the reasons for the association of Trump and racism.

But Thorson said "it's not unlikely this could be an accurate representation of what people are saying" on Twitter and that bias is probably not a factor.

"The platforms have gone out of their way to avoid any appearance of bias," she said.

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Twitter says the hack that compromised the accounts of some of its most high-profile users targeted 130 people. The hackers were able to reset the passwords of 45 of those accounts.

The San Francisco=based company said in a blog post-Saturday that for up to eight of these accounts the attackers also downloaded the account’s information through the “Your Twitter Data” tool. None of the eight were verified accounts, Twitter said, adding that it is contacting the owners of the affected accounts.

“We’re embarrassed, we’re disappointed, and more than anything, we’re sorry. We know that we must work to regain your trust, and we will support all efforts to bring the perpetrators to justice,” Twitter said in the blog post.

The July 17 attack broke into the Twitter accounts of world leaders, celebrities and tech moguls in one of the most high-profile security breaches in recent years. The attackers sent out tweets from the accounts of the public figures, offering to send $2,000 for every $1,000 sent to an anonymous Bitcoin address.

It highlighted a major flaw with the service millions of people have come to rely on as an essential communications tool.

Allison Nixon, chief research officer at cybersecurity firm 221B said in an email Sunday that the people behind the attack appear to have come from the “OG” community, a group interested in original, short Twitter handles such as @a, @b or @c, for instance.

“Based upon what we have seen, the motivation for the most recent Twitter attack is similar to previous incidents we have observed in the OG community — a combination of financial incentive, technical bragging rights, challenge, and disruption,” Nixon wrote. “The OG community is not known to be tied to any nation-state. Rather they are a disorganized crime community with a basic skill set and are a loosely organized group of serial fraudsters.”

While this attack did not appear to go further than the Bitcoin ruse — at least for now — it raises questions about Twitter’s ability to secure its service against election interference and misinformation ahead of the U.S. presidential election.

“Entire markets and potentially elections may be manipulated or altered in this way,” Nixon said. “Victims of account takeovers generally do not know that the fraud has occurred, and generally cannot take security precautions to prevent it.”

source: AP

 

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