Twitter shares plunge as user growth slows down
On Wednesday Twitter posted better-than-expected fourth-quarter revenue of $243m (€178m) in its first results as a public company. But investors focused on the anemic user growth, as well as a severe decline in timeline views, a measure of user engagement.
Twitter, which held an initial public offering in November at $26 a share, has divided investor opinion in recent months, as shares raced to more than $66 ahead of Wednesday’s results despite an absence of news.
Twitter’s valuation has been predicated in part on the belief it could expand its mainstream appeal and eventually become as ubiquitous as Facebook, which has five times as many users. Some analysts warned its valuation looked bloated.
User growth, a closely watched metric, sputtered. Twitter averaged 241m monthly users in the December quarter, up just 3.8% from the previous three months — the lowest rate of quarter-on-quarter growth since Twitter began disclosing user figures.
Shares fell sharply after hours on Wednesday to $54, down about 18% from a close of $65.97 on the New York Stock Exchange.
Twitter’s user numbers grew at 10%, 7%, and 6% during the first three quarters of the year, respectively, before coming in at 3.8% for the final period. Timeline views dropped sharply from 159bn to 148bn in the quarter, signalling that users were refreshing their Twitter accounts less often.
CEO Dick Costolo found himself facing repeated questions from analysts about when Twitter’s user growth might reaccelerate. Twitter made a number of changes to its layout during the recent quarter to help new users make sense of Twitter and stick with it, he said.
Twitter said it was targeting revenue of $230m to $240m in the first quarter.
