It's deja vu all over again as Jack Dorsey pulled a Zuckerberg and reported a miss - and a drop - in user growth, while warning of even greater declines in the coming quarter.

Looking at the financial results, they were not that bad, with the company reporting Q2 adjusted EPS 17c, just beating the estimate of 16c, with Q2 adjusted Ebitda of $265 million also beating estimates of $261.5 million, on Q2 revenue of $711 million, higher than consensus $697 million, of which ad revenue was $601 million, up 23% y/y, however a slowdown in US ad growth is starting to become obvious, with US ad revenues rising only 9%.

However, what spooked the market is that monthly active users were 335 million, a decline of 1 million from the prior quarter largely in the US (where MAUs dropped from 69MM to 68MM), and a miss of the average analyst estimates of 337.8 million.

Macquarie's Benjamin Schachter put it well in a note before the earnings came out:

"Despite Trump being perhaps the most high-profile user possible, usage has not dramatically improved over the past couple years. We simply don't see the product improvements having a dramatic impact on Twitter's ability to attract new users.''

He's right: the following long-term chart of user growth shows just how much it has slowed down in recent quarters.

And while the company does not disclose its DAUs, it was kind enough to report that there was a 11% growth there.

Here is how Twitter explained the drop in its monthly active users:

"Average MAUs were 335 million for Q2, an increase of 9 million year-over-year and a decrease of 1 million quarter-over-quarter, reflecting impact from decisions we have made to prioritize the health of the platform, to not move to paid SMS carrier relationships in certain markets and, to a lesser extent, GDPR. In aggregate, these factors reduced MAU by more than 3 million in Q2."

Things only got worse in the company's forecast, where Twitter now expects 3Q EBITDA would drop sharply to $235 million, falling short of estimates of $268 million.

But the biggest negative catalyst was that Twitter expects the MAU decline to accelerate in Q3, and "to be mid-single-digit millions of MAU":

As a result of our health work, decisions not to renew or move to paid SMS carrier relationships in certain markets, and our decision to allocate resources towards GDPR and health, MAU could decline on a sequential basis in Q3. Based on our current level of visibility, we expect the decline to be mid-single-digit millions of MAU. As a reminder, DAU growth continues to be the best measure of our success in driving the use of Twitter as a daily utility.

Then there was the expense side, where Twitter said it still expects to increase headcount 10% to 15% in 2018 - a la facebook - with hiring focused on health, audience and engagement growth, ad products and sales. The company also sees 2018 capital spending $450m-$500m (375-400 expected).

By this point investors, had had enough, and spooked by what happened to Facebook, decided to sell and ask questions later, sending the share price down between 15 and 20%:

Full Q2 slidedeck