[QODLink]
Americas

Twitter takes hit as user growth disappoints

Messaging website reports slowest pace of user growth in recent history, wiping out nearly a fifth of its value.

Last updated: 06 Feb 2014 02:00
Email Article
Print Article
Share article
Send Feedback
Twitter's valuation has been predicated in part on the belief it could expand its mainstream appeal [Getty Images]

Twitter has 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, 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 US 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."

Shares fell sharply after hours on Wednesday to $54, down about 18 percent from a close of $65.97 on the New York Stock Exchange.

The tumble came as a rude jolt for investors who had bid up Twitter shares to about 30 times projected 2014 sales, based on its Wednesday closing price - or more than twice as expensive as Facebook or LinkedIn.

318

Source:
Reuters
Email Article
Print Article
Share article
Send Feedback
Featured on Al Jazeera
UNHCR says hundreds of people trapped in Yaloke town risk death if they are not evacuated to safety urgently.
'Justice for All' demonstrations swell across the US over the deaths of African Americans in police encounters.
Six former Guantanamo detainees are now free in Uruguay with some hailing the decision to grant them asylum.
Disproportionately high number of Aboriginal people in prison highlights inequality and marginalisation, critics say.
Featured
Long-standing dispute over Christian use of the word 'Allah' raises concerns about a very un-Merry Christmas.
The threat posed by ISIL has prompted thousands of young Kurds to join the PKK.
Baja California - with its own grim history of disappeared people - finds a voice in the fight against violence.
Russian feminist rockers fight system holding 700,000 - the world's largest per capita prison population after the US.
Weeks of growing protests against Muslims continue in Dresden with 15,000 hitting the streets last Monday.