Twitter shares slumped on Thursday after the social network reported lower than anticipated revenues and higher costs and said it expected advertising technology bugs to continue to drag on profits.

Shares fell by almost 20% in early trading on the New York Stock Exchange to a low of $31.10, the weakest since March.

Twitter said the numbers reflected several “headwinds” including problems with its advertising technology and a dearth of big events such as the men’s football World Cup in the summer, although it fared well in the US, its main market.

Twitter reported revenues of $824m (£639m) for the three months to the end of September, up by 9% year on year but lower than the $871m expected by analysts. Twitter’s record quarterly revenue was $908m, in the final quarter of 2018.

Twitter Investor Relations (@TwitterIR) Q3 revenue was $824M, +9%, reflecting Sep strength in US, as well as headwinds incl rev product issues and greater-than-expected advertising seasonality in Jul/Aug. Op income of $44M reflects lower-than-expected revenue + no significant changes to our ongoing investments. $TWTR

The revenue shortfall was caused in part by bugs in Twitter’s advertising system on mobile apps. Twitter reported this month that it had been using personal data to target adverts without the correct user permissions. It turned off the features when it found the bugs, denting its ability to sell targeted ads.

The chief executive, Jack Dorsey, said the problems would continue to weight on revenues. For the final three months of the year, Twitter now expects total revenues of between $940m and $1.01bn, below Wall Street expectations of $1.05bn.

Dorsey admitted the firm had made some “missteps” during the quarter, but said upgraded technology meant bugs were “still painful but no longer existential as it was in the past”.

Profits were also weighed down by rising costs. Net income for the quarter was $37m, comparedwith an adjusted net income of $106m in the same period in 2018, excluding a one-off tax advantage. Earnings per share, a closely watched measure of profitability for shareholders, fell to $0.17, below the $0.20 expected by analysts. Costs rose by nearly a fifth year on year to $780m.

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Dorsey highlighted continued growth in the number of “monetisable” daily active users (DAU) – those to whom it can serve adverts. It had 145 million daily users on average through the quarter, up 17% comparedwith the same period last year and an increase from 139 million in the previous quarter.

Twitter has been trying to tackle online abuse on its platform. New features include allowing tweeters to hide replies – already introduced in the US and forthcoming in the UK – and better algorithms to find abusive comments automatically, without victims having to report them manually.

Dorsey said he was more confident that the company could help to tackle industry-wide challenges such as fake news and sometimes venomous debate. The company and other social networks such as Facebook have faced a barrage of criticism, including from US Democratic presidential candidates, over tolerance of false statements by political figures around the world.