Twitter user growth slows, but revenue more than doubles

Twitter’s third-quarter revenue outpaced expectations, but investors concerned about user growth and holiday-quarter sales clipped the company’s stock price late Monday.

The San Francisco-based company has been trying to increase its user base amid concerns that it doesn’t hold mass appeal in the way that the much-larger Facebook does. Its user base grew 23% to 284 million monthly active users, which Forrester Research analyst Nate Elliot said was “better than nothing.”

“It’s hard to be ecstatic about those numbers when it’s still a user base under 300 million people,” Elliot said. “It’s a social property less than a quarter (of the) size of Facebook.”

To appeal to more people, Twitter has tried to make it easier for people to sign up for and use its service, and it got a boost this summer from promoting itself as a place to follow the World Cup. In July, its stock grew 30% on the day it reported better-than-expected results and a 24% increase in its monthly user base.

This time, though, the growth wasn’t enough, which, coupled with a lackluster revenue guidance for the current period, was enough to send the company’s stock price nearly 8% lower in extended trading.

Twitter Inc. posted a loss of $175 million, or 29 cents a share, in the third quarter. That compares with a loss of $64.6 million, or 48 cents, a year earlier when it was still a private company. Adjusted earnings were 1 cent a share, matching expectations.

Revenue more than doubled to $361 million and beat the $351.5 million expected by analysts, according to FactSet.

Twitter went public last November at a price of $26 a share. The stock peaked in December at $74.73 and then declined sharply. On Monday, it closed at $48.56, then fell 7.9% to $44.77 after the third-quarter results were announced.