Twitter shares tank after company reports slowing user growth

Twitter shares tank after company reports slowing user growth
The Twitter logo on the facade of the company's headquarters in San Francisco. (David Paul Morris / Bloomberg)

Despite a surge in revenue, Twitter saw its stock fall 10% after it reported a slowdown in user growth in the first quarter.

The San Francisco company reported revenue of $250 million, up 119% year over year, for the three months ended March 31. It had a net loss of $132 million, or 23 cents, compared with a net loss of $27 million in the same quarter a year earlier.


The microblogging platform said its net loss included $126 million of stock-based compensation expense.

Excluding one-time events, Twitter's earnings per share were flat.

Analysts were expecting Twitter to report a loss of 3 cents a share, on revenue of $241.46 million, according to a survey by Factset.

Twitter reported its earnings after the markets closed. During regular trading, shares rose $1.89, or 4.64%, to $42.62.

In after-hours trading, shares were down $4.14, or 9.71%, to $38.48 at 1:40 p.m. PDT.

Twitter again struggled with user growth, a problem area during its last earnings report.

Twitter had 255 million monthly active users as of March 31, an increase of 25% year over year; analysts had expected 257 million. That also represented a slowdown in growth: Twitter had reported a 30% year-over-year increase in monthly active users during its last earnings report three months ago.

Mobile monthly active users reached 198 million in the first quarter, which represented 78% of the total.

Timeline views reached 157 billion for the first quarter, an increase of 15% year over year.

"We had a very strong first quarter. Revenue growth accelerated on a year-over-year basis fueled by increased engagement and user growth," Chief Executive Dick Costolo said. "We also continue to rapidly increase our reach and scale."

Advertising revenue totaled $226 million, up 125%. Mobile advertising revenue was about 80% of total advertising revenue.

Advertising revenue per thousand timeline views reached $1.44 in the first quarter of 2014, an increase of 96% year over year.

International revenue totaled $70 million, an increase of 183%, and accounted for 28% of total revenue.