Twitter at lowest level since debut after disappointing user growth

May 01, 2014 - 1:20:54 am

NEW YORK: Twitter shares sank to their lowest levels since the company’s market debut after the popular messaging platform reported a jump in revenues but disappointing growth in users.

The net loss for the first quarter amounted to $132m, wider than the $27m deficit a year earlier, largely due to a rise in stock compensation, Twitter said in its earnings statement.

Revenues grew 119 percent from a year ago to $250m, and monthly active users rose to 255 million.

Twitter shares plunged 10.6 percent to $38.08 in after-hours trade even though the revenue figures were better than expected. That was the lowest since the market debut last November. “The number everyone wants to see get bigger faster is average monthly active users,” said Paul Ausick at 24/7 Wall Street.

Ausick said the gain in users was 25 percent for the year but just 5.8 percent over the past quarter. “These numbers are good, but not good enough,” Ausick said in a blog post. “The consensus estimate for MAUs was 257 million and that relatively small difference has crushed the shares in after-hours.”

Arvind Bhatia, analyst at Sterne Agee, said the results were mixed. “User metrics, including reach and engagement, were slightly better than the fourth quarter but not as strong as the street expected,” he said in a research note.

Twitter chief executive Dick Costolo put a positive spin on the results. “We had a great first quarter,” Costolo said on the company’s earnings call. He added that “revenue growth accelerated” and that the company was making progress on its plans including “making Twitter more visually engaging.” Costolo said that with the integration of the mobile advertising startup MoPub, “we now reach more than one billion (Apple) iOS and Android users each month, making us one of the largest in-app mobile ad exchanges in the world and the only one at scale to offer native in-app advertising.”

Twitter made a splash last year on Wall Street with a surge on its market debut, but its shares have struggled since then amid doubts on its pace of growth and progress toward profitability.

Twitter said the number of monthly active users was up 25 percent from a year ago at 255 million, and 198 million were on mobile devices.

Advertising revenue hit $226m, an increase of 125 percent over the past year, with mobile accounting for roughly 80 percent of the total.

AFP

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