Shares of social networking service Twitter have taken a hit amid the tussle with Indian government over the new IT rules. Modi government's decision to tame the networking site accused of spreading fake news has stemmed a rally in the NYSE-listed stock.
On June 16, the networking site lost its intermediary status in India, after government said it gave Twitter multiple opportunities to comply with the new IT rules. The stock closed at $59.93 on Wednesday, down 0.50% on NYSE. Market cap of the firm fell $0.43 billion to $47.64 against the market cap of $48.07 billion in the previous session.
The stock stood at $59.93 today, a decline of 25.78% after touching a 52-week high of $80.75 on February 26.
Here's a look at how Twitter's clash with the Indian government has affected the stock.
Shares of Twitter closed at $43.48 on November 13 last year when Indian government sent a notice to Twitter for showing Leh as part of Jammu & Kashmir instead of the Union Territory of Ladakh. Soon after #BanTwitter started trending on social media.
Market cap of the firm in that session stood at $34.58 billion.
However, the stock continued to climb and reached $54.58 on February 3, 2021. The Modi government's clampdown on Twitter over the posts published on the network began on the same day.
Twitter was issued a legal notice for reinstating a number of accounts that supported the farmers' protests despite the IT Ministry's directive to block those and warning of consequences "of non-compliance of directions issued under section 69A of the ITAct".
Market cap of Twitter stood at $43.45 billion during the session.
On February 4 this year, the ministry of electronics and information technology sent a fresh directive to Twitter, for removal of over 1,000 accounts flagged by security agencies as those of Khalistan sympathisers or backed by Pakistan amid the ongoing farmer protests.
A list of 1,178 accounts was sent to the networking site.
According to reports, Twitter had not responded to that notice with some even suggesting that the government took note of Twitter CEO Jack Dorsey liking some pro-farmer tweets made by celebrities.
By that day, the Twitter stock had risen to $56.51 on NYSE. Market cap of the firm reached $44.98 billlion.
Unperturbed by the adverse developments, the stock went on to hit a 52 week high of $80.75 on February 26, 2021. The stock had rallied 133.17% in last one year. On February 26 last year, the share stood at $34.63.
Market cap of the firm rose to $61.51 billion in the same session.
However, the stock could not sustain the rally and fell to a low of $50.11 on May 13 amid the firm's ongoing tussle with the Indian government. In over a month, the share has logged a minor recovery and not been able to breach the $61 mark.
Introduction of new IT rules to exercise control over social media platforms can be cited as a major factor for crash in the stock.
On February 25, the Modi government announced new code of ethics for social media channels and OTT platforms under new IT Rules, 2021. The all-new code of ethics mandated intermediaries to exercise "due caution and discretion" in relation to the general principles around online curated content.
Under the new rules, the government will ask the platform to reveal the originator of a message (or tweet). Voluntary verification of users and appointment of a compliance officer as well as grievance officer was also proposed. The government also asked to appoint a 24x7 point of contact.
The new rules came into effect on May 26. All social media platforms except Twitter complied.
On June 5, the Centre sent a final notice to Twitter to comply with the new IT rules.
Issuing "one last notice" to the micro-blogging site, the Centre warned of "resultant consequences" if it fails to comply with the new norms amid an escalating standoff with Twitter.
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