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Twitter Reveals a Slump in Profits After Settling Long-Running Lawsuit

After paying $809.5 million (£588 million) to resolve a long-running lawsuit, Twitter lost more than half a billion dollars in the three months leading up to September.

In 2015, the social media behemoth was accused of deceiving investors about user engagement.

Despite this one-time penalty, its quarterly sales increased by 37% as it avoided the impact of Apple’s privacy rules, which affected rivals like Snap and Facebook.

Twitter’s stock rose 3% as a result of this.

In September, Twitter and its stockholders agreed to resolve a class action lawsuit that had been pending since 2016.

Twitter allegedly deceived investors regarding how many users were active on the network each month and how often they saw Twitter’s timeline, according to the lawsuit.

The corporation denied any wrongdoing, but decided to pay the claim with cash on hand, indicating that it would harm the company’s bottom line this quarter.

And it did, with Facebook posting a net loss of $537 million (£390 million) in the third quarter.

However, there were some bright spots for the San Francisco-based firm.

Unlike its competitor Snap, whose stock dropped 25% last week, Twitter was mostly unaffected by Apple’s privacy reforms.

It produced $1.14 billion (£830 million) in ad revenue during the quarter, describing the impact as “minimal” because most of its advertisers do not use highly targeted ads.

On a conference call with analysts, Chief Financial Officer Ned Segal said the platform is expanding its focused advertising business, such as by introducing themes that users may follow on Twitter.

“There’s a lot of possibility in front of us,” he remarked.

In June, Apple released a set of privacy changes that prevent internet advertisers from monitoring iPhone users without their permission.

When Facebook presented its financial report earlier this week, it said they were producing “headwinds.”

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