Twitter Inc. made its first earnings report as a public company and revealed that its user growth has decreased. The company also posted a net loss that exceeded analysts estimates. Twitter Inc.s shares dropped as much as 19% in extended trading.
The company made an official statement, saying it had 241 million active users on a monthly basis during the fourth quarter. The figures are up 30% from the 185 million active users a year earlier but expanded slower than the 39% growth posted in the prior period. The usage of the social network also decreased, with 148 billion views of timelines in the fourth quarter compared with 159 billion recorded in the third quarter.
Twitter Inc.s net loss is estimated to 511.5 million dollars in comparison to the one for the previous year, which was 8.7 million dollars. The companys net loss more than doubled the analysts forecasts of 253.5 million dollars.
At 37.4 billion dollars, Twitters market capitalization is higher than Target Corp and Salesforce.com Inc., but the company may find it hard to justify its valuation. After the initial public offering of the company in November 2013, its stock has increased, which gave grounds to some analysts to think Twitters sales will also rise.
One of the analysts working for S&P Capital IQ Inc. – Scott Kessler said in an interview cited by Bloomberg: “We are concerned about the slowing user growth and the lower engagement data and whether or not they’re going to be able to sustain momentum. If they’re not sustaining momentum in those areas, it’s going to call into question the value proposition that they can provide to global advertisers.”
As reported by Bloomberg, Dick Costolo, who is the Chief Executive of Twitter Inc. explained that the company is addressing the slowing growth with plans to increase the number of users and engagement primarily by making the site easier to use. He said: “It will be a combination of changes introduced over the course of the year that will start to change the slope of the growth curve.”
Twitter Inc.s shares fell in extended trading after declining by 0.53% to $65.97 in New York. The 27 analysts offering 12-month price forecasts for CNNMoney have a median target of $50.00, with a high estimate of $75.00 and a low estimate of $32.00. The median estimate represents a -24.21% decrease from the last close.
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