Twitter stock falls on purge of 70 million fake accounts

Twitter's shares took an initial plunge Monday after a Washington Post article reported that the company suspended more than 70 million fake accounts in May and June -- a cleanup of the platform that may affect user growth.

The Post story, which was published Friday, said that the suspensions of the accounts could have some impact on the company's tally of monthly active users, a key growth metric closely monitored by Wall Street investors.

The initial drop of more than 8 percent Monday -- the largest single day percentage dip since March -- comes on the heels of a positive run for Twitter. Overall its shares are up almost 150 percent over the past 12 months, and it posted its first profit ever in February.

The stock shaved some of its losses after Chief Financial Officer Ned Segal tweeted that most of the removed accounts are inactive and thus don't count against Twitter's monthly user numbers. Twitter reported 336 million users in April. However, the aggressive removal of unwanted accounts could result in a rare decline in the number of monthly users when the company reports its quarterly results later this month, a person familiar with the situation told the Post last week.

Twitter shares on the New York Stock Exchange closed down 5.4 percent at 44.14.

"The broader health initiatives that is removing spamming and suspicious accounts from Twitter continues to be something that will impact [monthly active users]," Segal said on the company's earning's call. "We're always going to do the right thing to make sure that the service is great for those that should be on it."

While falling user growth is a risk for Twitter, so are fake accounts that often stoke disinformation and manipulation. Twitter has gotten much more serious since last year about cracking down on its longstanding problem of fake accounts, the Post reported. The decision to devote more resources to the issue came after a protracted battle within the company, and is a response to increased scrutiny in the wake of Russian meddling and of news reports about the severity of the fake-account problem. Twitter has also gained new technical capabilities that have enabled it to improve its detection of fake accounts.

The company estimates that roughly 5 percent of its active users are fake or involved in spam, but outside researchers have said the number is much higher.

Twitter disclosed some details about the crackdown, which it refers to as information quality efforts, in April. Segal said the effort was already affecting monthly user counts and would be expected to do so in the future.

Information for this article was contributed by staff members of The Associated Press.

Business on 07/10/2018

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