Twitter shares plunge 20% on weak user-growth

Investing.com - Twitter saw shares plunge sharply in pre-market trade on Thursday, after the social media network reported a drop in Timeline views and slowing monthly active user growth after markets closed on Wednesday.

Investors sold off the stock after the company’s fourth quarter earnings report showed that Timeline views fell 7% to 148 billion in the three months ended December 31 compared to the preceding three months.

On a year-over-year basis, Timeline views were up 26%, but that was a much slower pace than a 50% increase reported in the third quarter.

Timeline views refer to the total number of timelines requested when registered users visit Twitter, refresh a timeline or view search results.

Average Monthly Active Users (MAUs) were 241 million as of December, 31, 2013, below expectations for 249 million MAUs and only 4% higher than at the end of the third quarter.

Twitter shares initially rallied after the company said adjusted earnings per share came in at USD0.02 in the fourth quarter, compared to expectations for a loss of USD0.02 per share.

The company’s fourth quarter revenue totaled USD243 million, up 116% year-over-year and beating estimates for revenue of USD216 million. Full year revenue came in at USD665 million, up 110% year-over-year.

"Twitter finished a great year with our strongest financial quarter to date," said Dick Costolo, CEO of Twitter. "We are the only platform that is public, real-time, conversational and widely distributed and I'm excited by the number of initiatives we have underway to further build upon the Twitter experience."

Twitter is guiding for first quarter revenue of USD230M to USD240M, above a USD215.2 million consensus. Full-year guidance is for revenue of USD1.15 billion to USD1.2 billion, compared to expectations for revenue of USD1.13 billion.

Twitter shares tumbled 19.5% ahead of the opening bell to USD53.21. The stock is down more than 20% since hitting a recent peak, meeting the technical definition of a bear market.

Despite recent losses, Twitter shares are still up nearly 50% since its initial public offering.

Meanwhile, U.S. stock futures pointed to a mildly higher open. The Dow Jones Industrial Average futures pointed to a gain of 0.3% at the open, S&P 500 futures added 0.3%, while the Nasdaq 100 futures picked up 0.3%.