SAN FRANCISCO, (Reuters) – Twitter Inc yesterday reported its slowest pace of user growth in recent company history, dimming hopes that the social media phenomenon can sustain its torrid pace of expansion and wiping out nearly a fifth of the company’s value in after-hours trading.
The San Francisco company posted better-than-expected fourth-quarter revenue of $243 million 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 a highly anticipated 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 Inc, which has five times as many users. Some analysts warned that its valuation looked increasingly bloated.
User growth, a closely watched metric, in fact sputtered. Twitter averaged 241 million monthly users in the December quarter, up just 3.8 percent from the previous three months – the lowest rate of quarter-on-quarter growth since Twitter began disclosing user figures.
“What this report will do is it will question how mainstream is Twitter as a platform,” said Arvind Bhatia, an analyst at Sterne, Agee & Leach. “Both in the U.S. and internationally, the monthly active user base did not grow as fast as people thought, and that has an impact on the number of timeline views.”
