Twitter stock plunged 11 percent in after-hours trading after the company released disappointing third-quarter results on Tuesday. While Twitter met its revenue target for the quarter, user growth has slowed to a crawl, and the company revised its fourth-quarter financial results downward. The news comes a couple of weeks after CEO Jack Dorsey announced layoffs of 8 percent of the company's workforce.

Dorsey is trying to turn Twitter around after a year of poor performance. "We do not expect to see sustained, meaningful growth in monthly active users until we start to reach the mass market," chief financial officer Anthony Noto said at the last earnings call in July. "We expect that will take a considerable period of time."

Twitter's dismal performance prompted one of the company's biggest investors, venture capitalist Chris Sacca, to pen a widely read memo earlier this year discussing Twitter's problems and suggesting some solutions. "Twitter has failed to meet its own stated user growth expectations and has not been able to take advantage of the massive number of users who have signed up for accounts and then not come back," Sacca wrote.

Twitter's basic problem is that it doesn't enjoy the same mass-market appeal of Facebook, which has more than four times as many users. But there's no obvious reason — save maybe the company's valuation — that that should be a problem. Twitter could arguably build a strong business by focusing on its current user base. What it's failing to do is show Facebook-like numbers, which is what Wall Street really wants from Twitter. So Twitter faces pressure to change the core service in ways that could drive off its most loyal fans.

Twitter suffered yet another quarter of losses

Twitter is one of the internet's most popular sites, with more than 320 million users. But the company has fallen far behind Facebook, and user growth has been stalling recently. Twitter said that it gained just 4 million users, growing from 316 million to 320 million users. For comparison, Facebook has around 1.5 billion users.

And despite large and growing revenues, the company has struggled to turn a profit. Twitter lost $578 million in 2014. In the first six months of 2015, Twitter's revenues were an impressive $938 million, but the company lost $299 million.

On Tuesday, Twitter revealed that the third quarter has brought more of the same. Revenues were $569 million — a significant increase from last year's third-quarter revenues. But the company lost $132 million dollars for the quarter — less than they lost in Q3 2014, but still troubling for a company whose user growth has nearly stopped.

Twitter is optimized for power users

Many of Twitter's strengths — and also its weaknesses — come from the fact that tweets in a user's timeline are displayed in strictly chronological order. Any time you log in to Twitter, you see the most recent tweets from people you follow.

This focus on recency makes Twitter indispensable for certain kinds of users. If you're a journalist following a breaking news story, for example, Twitter is by far the best source of information. And for people who sit in front of a computer all day, Twitter is a great way to always stay on top of the latest conversations.

But presenting tweets in a strict reverse chronological order can make the service less useful to casual users. People whose jobs don't involve sitting in front of a computer might only check in once or twice a day. They care more about seeing the most important information than the most recent. Facebook's newsfeed is designed for these users. It uses a proprietary algorithm to predict which posts users are most likely to care about, ensuring that you see your friends' wedding and pregnancy announcements.

Until recently, Twitter didn't do this. Because Twitter made little effort to prioritize tweets, users have had to do more work to make it useful. Power users carefully curated the list of people they follow to optimize their Twitter experience. A lot of casual users didn't have time for this, and as a result Twitter felt chaotic and overwhelming to them.

These different schemes for ordering posts have led the two sites to be used in different ways. Facebook has become the most popular way for ordinary users to share personal content with friends and family. Twitter, by contrast, is used in more impersonal ways. People use Twitter to see tweets from their favorite celebrities, journalists, and other public figures, to stay up to date on the news, and to share snarky insights into the news of the day.

This difference has had huge business consequences because the number of people who want to stay in touch with friends and family is vastly larger than the number of people who want to keep up with current events. Facebook had 1.49 billion monthly active users in June 2015 — more than four times Twitter's 320 million active users.

And while Facebook's audience is about four and a half times the size of Twitter's, Facebook's revenues are nearly eight times as large.

Twitter recognizes that this is an issue and has begun experimenting with new features to help casual users get value from the service. Earlier this year, the company added a "while you were away" feature to show a handful of popular tweets that were posted since your last login. A few weeks ago, Twitter introduced Twitter Moments, which presents curated collections of tweets about breaking news stories. Twitter is hoping features like this will jump-start the company's growth, but it's too soon to say if the strategy is working.

Twitter is falling behind other social media sites

By most standards, a company with 320 million users and more than a billion dollars in annual revenue is a big success. But Twitter became a publicly traded company in 2013, and so it faces pressure from Wall Street for continued growth.

Twitter hasn't delivered: