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Twitter is embroiled in a grueling authorized struggle with Elon Musk as he tries to again out of a $44 billion acquisition of the corporate. It has slowed its hiring because it grapples with a flagging economic system. Its inventory worth has slumped.

On Friday, Twitter revealed the toll from these challenges. In an earnings report, the corporate stated the uncertainty attributable to Mr. Musk had damage its enterprise, alongside macroeconomic troubles. Twitter’s quarterly income declined for the primary time since 2020 because it struggled to be a vacation spot for advertisers and swung to a internet loss.

The lackluster earnings report ramps up the blame sport that has erupted between Twitter and Mr. Musk, who swooped in and uncovered the corporate’s lack of enterprise and monetary prospects as he has gone backwards and forwards over shopping for the social media service. Mr. Musk, who additionally leads the electrical carmaker Tesla, had agreed to purchase Twitter in April and stated he would take it non-public. He privately informed traders that he may quintuple the corporate’s income by 2028 and broaden it to 931 million customers that very same yr.

However because the inventory market has teetered, flattening shares of Tesla — which is his foremost supply of wealth and has misplaced a 3rd of its worth this yr — Mr. Musk made more and more barbed feedback about Twitter. This month, he moved to terminate the deal. Twitter has since sued him to finish the acquisition, and a five-day trial to adjudicate the matter is scheduled for October in Delaware Chancery Court docket.

“Twitter now has an acquirer who not needs it, it has a C.E.O. and a board who need to do away with it, and an worker base who’s caught within the center,” stated Mike Proulx, a analysis director at Forrester. “None of that is good for Twitter.”

In its earnings assertion, Twitter attributed the disappointing outcomes to “promoting trade headwinds related to the macroenvironment in addition to uncertainty associated to the pending acquisition of Twitter by an affiliate of Elon Musk.”

In complete, income was $1.18 billion for the second quarter, down 1 % from a yr earlier, a far cry from the 20 % progress that it had as soon as predicted for the yr. Twitter’s income fell 2 % from the primary to second quarter, which roughly coincides with the intervals instantly earlier than and after Mr. Musk made his transfer on the corporate.

The corporate’s internet loss was $270 million, a significant swing down from a revenue of $66 million a yr earlier, as prices and bills grew.

There was one brilliant spot. Twitter stated it had 237.8 million every day energetic customers who noticed adverts, up almost 17 % from a yr earlier.

Mr. Musk didn’t reply to a request for remark.

In current months, Twitter and different social media corporations have confronted a dismal promoting market. Fears about an financial downturn and the struggle in Ukraine have tamped down advert spending, which social media corporations depend on for many of their income.

On Thursday, Snap, the maker of Snapchat, reported its slowest-ever price of quarterly progress and a wider loss. Snap’s shares plunged 39 % on Friday, pushing its market capitalization beneath $17 billion.

Twitter’s and Snap’s earnings may bode sick for different web corporations that depend on promoting for the majority of their earnings. Meta, the mum or dad firm of Fb, and Google report earnings subsequent week.

Twitter faces further worries from advertisers concerning the potential takeover by Mr. Musk, who has stated he hates promoting and desires to chill out Twitter’s content material moderation insurance policies, which have prevented adverts from showing alongside objectionable content material.

Parag Agrawal, Twitter’s chief govt, has informed workers the corporate has not lived as much as its potential and has reduce prices, fired high executives and exhorted workers to disregard Mr. Musk’s fireworks in current months.

Nonetheless, the financial headwinds detailed by Twitter on Friday will not be a giant fear to present shareholders if a courtroom forces Mr. Musk to take possession of the corporate at his proposed worth of $54.20 per share, stated Wealthy Greenfield, a co-founder of LightShed Companions, a analysis agency.

“The humorous factor is, earnings kind of don’t matter,” he stated. “On the finish of the day, in the event that they promote the corporate at $54.20, it’s Elon’s drawback, not the market’s drawback.”

Twitter’s share worth was $51.70 on April 25, the day the corporate’s board accepted Mr. Musk’s supply. However the inventory has largely headed downhill since, spending the previous month beneath $40. Its shares declined lower than 1 % in early buying and selling on Friday however have been up almost 1 % on the shut.

Buyers might be involved about Twitter’s income provided that the deal collapses and the corporate’s enterprise fundamentals regain their significance, Mr. Greenfield added. “If the deal totally falls aside, we all know the inventory would go down,” he stated. “However the query is, ‘How a lot?’”

Mr. Musk has additionally accused Twitter of deceptive traders and undercounting the inauthentic accounts on its platform. The corporate has stated that these accounts make up fewer than 5 % of the energetic customers on its platform and that it makes use of consultants to audit its depend. Twitter reiterated this determine in Friday’s submitting.

As its battle with Mr. Musk unfolds, Twitter has tried to keep away from the highlight. For the second quarter in a row, the corporate declined to carry an earnings name with Wall Avenue analysts, dodging the uncomfortable questions on Mr. Musk’s influence on the enterprise which may have been raised.

“The corporate is exceedingly quiet,” Mr. Greenfield stated. “It’s been months since any traders had any conversations with the corporate.”

Mr. Musk additionally faces enterprise issues at Tesla. The carmaker reported on Wednesday that its quarterly revenue had fallen due to provide chain delays and the worth of Bitcoin, which the corporate had invested in.