SAN FRANCISCO -- Twitter, Wall Street is just not that into you anymore.
Shares of the social media company plummeted Thursday, obliterating about $9.8 billion in market value, after Twitter reported a slowdown in user growth and engagement.
The stock which hit a high of $74.74 in December, was trading down 21% to $52.11 and at one point sank as low as $50. Twitter debuted in November at $26.
Analysts are divided on what Twitter's disappointing fourth-quarter performance portends for the future. Some believe Twitter is now showing that it's a niche service that will never gain the mainstream appeal of Facebook, which has five times as many users. Others contend Twitter is still in the early stages of growth and could one day challenge Facebook on mobile devices.
Twitter on Wednesday reported better-than-expected fourth-quarter revenue in its first earnings report as a publicly traded company. But tepid user growth and a decline in user engagement pummeled the stock in after-hours trading.
During an earnings call with analysts, Twitter Chief Executive Dick Costolo sought to reassure investors, saying he was confident Twitter could attract new users in 2014.
It was the first major misstep for Twitter, which had avoided the runaway hype and technical glitches that marred Facebook's initial public offering.
"We believe shares of Twitter have commanded a significant premium to its high-growth peers due to its higher growth rates. Fourth-quarter results are likely to raise questions on how mainstream the Twitter platform can be in the long-term," said Sterne Agee analyst Arvind Bhatia, who lowered his rating to "underperform" and issued a price target of $43.
But JPMorgan analyst Doug Anmuth maintained his neutral rating and increased his price target to $44 from $40.
"We recognize that it is still early in potential user growth, and certainly in ad monetization and product innovations," he said.
But he, too, acknowledged the question of whether Twitter can appeal to a broad audience.
"The challenges around user metrics in the fourth quarter are likely to raise more questions around whether Twitter can become a truly mainstream product," he said. "We think overall engagement concerns are likely to overshadow monetization strength in the near term."