Twitter's stock fell more than 10 percent after hours to $38.05,
below its post-initial public offering low of $38.80 on November 25.
Perhaps most worrying, the San Francisco-based company said its 255
million monthly users, on average, appeared to check the service
less frequently than a year ago.
The results revealed slowing momentum at a company that exuberant
investors just six months ago had argued could one day match
Facebook Inc's scale. At its peak in December, Twitter enjoyed a $46
billion market capitalization on just $665 million of revenue in
2013, making it one of the world's priciest stocks.
But cracks began to show in February, when Twitter disclosed that
user growth had fallen to its lowest rate in years, prompting Chief
Executive Dick Costolo to promise tweaks to Twitter's design.
Expectations of Twitter growing into a communications utility that
Facebook has become are "unrealistic and divorced from reality,"
said Brian Wieser, an analyst at Pivotal Research. "Twitter is and
will remain a niche medium, and a very powerful one."
On a conference call Tuesday, Costolo repeatedly told Wall Street
analysts that tweets from the Academy Awards show in March have been
viewed more than 3 billion times online and mentioned countless
times more on radio and television shows.
"Twitter — the platform — we believe is already incredibly
mainstream," Costolo said. The challenge, he added, was to convince
the world to see the "value of the logged-in experience."
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Although overshadowed by the usage figures, Twitter posted
better-than-expected revenues of $250 million. The company, which
has been steadily refining its targeting capabilities, also showed
signs it is better able to present ads based on what it thinks each
user would be interested in, and is thus able to command higher ad
Twitter said its advertising revenue per thousand timeline views,
which measures the effectiveness of its ads, nearly doubled to $1.44
over the past year.
Excluding certain items, Twitter broke even against Wall Street
expectations of a 3 cent per share loss. But the company said its
net loss in absolute terms widened nearly fivefold to $132 million
from $27 million a year ago.
In May, shareholders can sell to sell up to 489 million shares, or
83 percent of Twitter shares outstanding. The company said Tuesday
it would not hold a secondary sale to avoid flooding public markets
with employee shares.
Twitter said in a securities filing earlier this month that
co-founders Jack Dorsey and Evan Williams, as well as Costolo and
venture capital firm Benchmark had no intention of selling their
shares upon the lockup's expiration.
(Reporting by Gerry Shih; editing by David Gregorio and Richard
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