Twitter stock hit by slow growth

Twitter’s slowing user growth pushed the stock to the lowest since last year’s market debut.

The company said yesterday membership in the first quarter reached 255 million, with year-over-year growth decelerating to 25% from 30% in the previous period.

The stock plunged as much as 14% in trading, even as sales more than doubled to $250 million (€180m), topping analysts’ estimates.

Twitter’s efforts to move past microblogging and into image and video sharing have failed to spur a surge in users in a market where Snapchat and Facebook’s Instagram application are gaining popularity. The company needs more consumers adopting the service and staying on longer as it vies for marketing dollars in web and mobile advertising.

Chief financial officer Mike Gupta said the company has no plans to pursue a secondary share sale.

Twitter’s net loss widened to $132.4m (€95.4m), or 23c cents a share, from $27m (€19.4m) a year earlier. Excluding some items, the company broke even, beating the 3-cent loss predicted by analysts.

Even as user growth slowed, people viewed their Twitter timelines more often, with 157 billion views, up 15% from a year earlier.

Chief executive Dick Costolo said he is tweaking the company’s product to draw in and retain users. Twitter has tried altering its design to display images and videos more prominently. This year, the company is working to simplify private messaging, Costolo said.

“The distribution and consumption of tweets around the world is already mainstream,” Costolo said. “Now, what we’re in the process of doing is working to increase the value of the logged-in experience.”

He said the company is seeing signs of accelerating user growth.

The company forecast second-quarter revenue of $270m (€194m) to $280m. Revenue for the year will be $1.2 billion (€865m) to $1.25bn, Twitter said.

Twitter is competing with Facebook and Google in the market for mobile ad dollars. The company recently said it will offer ads that software developers can use to drive more downloads of their applications — a product type that has helped Facebook boost mobile revenue. Using its ad network, acquired in last year’s purchase of MoPub, Twitter has said it can reach more than 1 billion phones.

Mobile advertising revenue accounted for 80% of total ad sales, Twitter said.

Twitter’s share of the $31.5bn mobile ad market is expected to rise to 2.7% this year from 2.4% in 2013, trailing Facebook’s 22% and Google’s 47%.

- Bloomberg