Kerrrrrplunk!
Twitter’s shares tumbled back toward earth Wednesday evening after the microblogging company reported revenue in the fourth quarter more than doubled — but noted that its ability to maintain its pace of adding new members is slowing.
The company, which boasts a plethora of high-profile users, including the likes of actor Ashton Kutcher and pop star Justin Bieber, dropped as much as 19 percent in after-hours trading, to about $54 a share.
It had closed regular trading on Wednesday at $65.97.
The company, in its first quarterly results report since it went public last fall, reported 241 million monthly active users in the fourth quarter, up just 3.8 percent from the previous quarter — which had gained 6.4 percent from 2013’s second quarter.
That is a slower growth rate than Wall Street was expecting — and far overshadowed what was a great fourth quarter for attracting ad dollars.
At the same time, the San Francisco firm’s metric for measuring engagement, called timeline views, fell in the fourth quarter for the first time, to 148 billion, from 159 billion the previous quarter.
Twitter’s timeline views are a measure of how much users look at the site, including how often they refresh the posts of the people they follow.
It is important for Twitter to grow users’ engagement so it can prove to advertisers its importance to users.
Twitter CEO Dick Costolo attributed the drop in timeline views to changes the company made last quarter to improve users’ experience.
Costolo said changes like threaded conversations were added to enhance users’ experience, but they also cut down on the number of times users scrolled through a timeline to follow a particular discussion.
Revenue in the quarter grew 116 percent, to $243 million, from last year.
The company — which went public last Nov. 11 at $26 a share and within seven weeks nearly tripled in price to $74.73 — saw monthly active users grow by 38.9 percent in the third quarter of 2013.
The previous quarter, monthly active users were up an impressive 44.3 percent.
The slowdown “has long-term ramifications as people try to figure out whether Twitter will become a mainstream platform,” said Arvind Bhatia, an analyst with Sterne Agee.
“What they saw in the fourth quarter cannot be sustainable,” he said.
Speaking so emphatically during the conference call that he sometimes appeared to be shouting, Costolo, 50, promised growth in 2014.
“We feel well-positioned for growth in 2014,” he said. “We will reach many more people.”
Twitter, which has never reported a profit, said it had a net loss of $511.5 million, or $1.41 a share, compared with a loss of $8.7 million, or 7 cents, last year.
It projected 2014 revenue of $1.15 billion, slightly higher than analysts have forecast.