A loss for Russian VKontakte owner VK in the second quarter

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A loss for Russian VKontakte owner VK in the second quarter

VK, an owner of the Russian social network VKontakte, reported a second-quarter net loss of $56 million on Thursday. This was in part due to a foreign exchange hit of  $231 million.

VKontakte network, which is often compared to Facebook, has emerged as one of the key players in the race to replace Western social media services, especially in the wake of Russia's invasion of Ukraine and Moscow's subsequent blocks to Western platforms.

A 3.6 billion rouble profit had been adjusted from a 3.6 billion rouble profit in the second quarter after the rouble experienced a period of volatility, rebounding from a record low in March to a near seven-year high in June. According to the company, adjusted earnings per share for the period fell by 37% from the previous year to $69 million.

Despite the recent war with Ukraine, Russia seems determined to encourage the rapid development of domestic digital alternatives. The country has accelerated efforts to exert control since the day when it launched the war on the country on February 24.

Several social media sites including Twitter, Facebook, and Instagram have been blocked by the Kremlin and Meta Platforms Inc has been found guilty of "extremist activity". As the result of a shake-up among shareholders and management, Gazprom Media acquired a chunk of VK's voting rights in December, adding to the company's growing media empire controlled by the state energy company.

At the end of April, Yandex announced it was selling its news aggregator Yandex News and content recommendation service Yandex Zen to VK, but it did not disclose the terms of the transaction.

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