Twitter stock dropped as much as 9% when it was reported that the company increased its suspension of fake accounts. Washington has wanted the microblogging company, to eliminate fake accounts, and now Wall Street has become anxious as to whether Twitter is will do so.
On Friday, it was reported by the Washington Post that there was misinformation and other misuse of the social media network by Twitter, which resulted in 70 million accounts being suspended in May and June.
If in fact the number of suspended accounts is 70 million, it would represent almost 20% of the entire active accounts Twitter has. Twitter as of the end of the first quarter of 2018 had 336 million monthly active users.
The technological industry has been under a microscope due to the false news published and election interfering. However, the main focus point for Wall Street is to assess the social media platforms and their potential for generating advertising revenue.
There was concern on Monday as many analysts attempted to measure the panic of investors. One analyst mentioned that the market is exaggerating the problem with Twitter. He stated that if accounts were suspended or eliminated, then the account holders would complain because they would feel they had their accounts wrongfully suspended, but that has not happened.
A Twitter spokesperson said the company has been increasing the number of accounts it suspends. This has come about due to the improvement in technology and processes. Shareholders were told in April that monthly active user numbers could be negatively impacted by the continuing efforts to increase quality, as well as other factors.
Other analysts tend to believe that investors may feel nervous about any sign of bad news since Twitter has enjoyed solid growth of late. In a previous report, analysts stressed that the stock had almost doubled in 2018. That has help Twitter following solid growth in users and advertising during two consecutive profitable quarters.
An analyst on Wall Street has said that the stock could go through somewhat of a correction due to it increasing over the last six months, but does not expect a big correction.