As it tries to back out of a $44 billion acquisition of the company, it revealed on Friday what could be even deeper problems facing its business as it struggles to be a destination for advertisers.
Revenue at the social media company was $1.18 billion for the second quarter, down from a year earlier. It used to predict 20 percent growth for the year. The company reported a net loss of $270 million, a huge swing from a profit of $66 million in the same quarter last year.
The company's stock price fell more than 2% before the market opened.
The company said it had more than 200 million daily active users who saw ads.
The earnings report could make Mr. Musk want to end his deal to buy the micro-blogging site. Mr. Musk said he would take it private after agreeing to buy the micro-messaging service. He told investors that he could double the company's revenue in a single year.
His main source of wealth was taken away as the stock market teetered. He decided to end the deal. A five-day trial to adjudicate the matter will be held in Delaware Chancery Court in October.
Mike Proulx, a research director at Forrester, said that there is a board who wants to get rid of it and an employee base who is caught in the middle. This isn't good for the social networking site.
Advertising industry headwinds associated with the macro environment as well as uncertainty related to the pending acquisition of Twitter were blamed for the disappointing results.
The advertising market has been gloomy in recent months. Social media firms rely on ad spending for most of their revenue because of the fear of an economic downturn. In after-hours trading, the company's shares plummeted 26 percent after it reported its slowest-ever rate of quarterly growth.
Advertisers are concerned about the potential takeover by Mr. Musk because he hates advertising and wants to relax content moderation policies.
Some investors think a court will force Mr. Musk to buy the company at his proposed price, which will make him the company's owner.
The co- founder of LightShed Partners said that earnings don't matter. If they sell the company at $54.20, it's not the market's problem, it's the problem of the CEO.
If the deal collapses and the company regains their importance, investors will not be worried about revenue. The stock would go down if the deal fell apart. The question is how much.
Mr. Musk has accused the company of understating the number of accounts on its platform. According to the company, those accounts make up less than 5 percent of the active users on its platform and that it uses experts to audit its count. Friday's filing shows that this figure is still in tact.
As the battle with Mr. Musk continues, the social media site has tried to keep out of the spotlight. For the second quarter in a row, the company declined to hold an earnings call with Wall Street analysts.
The company is very quiet. It has been a long time since any investors had a conversation with the company.
Mr. Musk is facing concerns at the company. The company reported on Wednesday that its quarterly profit had fallen due to supply chain delays and the price of Bitcoins.
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