Shares of Twitter were absolutely slammed on Thursday, after a mixed earnings report on Wednesday that beat expectations but showed slowing user growth.
The stock ended trading down $15.92, or 24.13%, to $50.05 a share.
In the report, Twitter saw its average monthly active users (MAUs) grow 30% year to year to 241 million, while mobile MAUs increased 37% to 184 million. They represented 76% of the company's total MAUs.
"Despite high brand awareness, high visibility in media channels, and increased publicity around its IPO in November, Twitter’s user growth was muted and we remain concerned about the continued deceleration in MAU growth," JP Morgan analyst Doug Anmuth wrote in a note.
"Twitter maintains some of the industry’s strictest limits on ad load in order to optimize for user experience, and the company is launching several initiatives through 2014 to accelerate user growth and improve user retention. These include simpler on-boarding processes with a native mobile sign up and messages to reengage inactive users."
Still, Anmuth also raised his price target on the stock from $40 to $44.
"We recognize that it is still early in potential user growth, and certainly in ad monetization and product innovations, but the challenges around user metrics in 4Q are likely to raise more questions around whether Twitter can become a truly mainstream product. We think overall engagement concerns are likely to overshadow monetization strength in the near term," he wrote.
Twitter CEO Dick Costolo addressed the issue of user growth in a conference call on Wednesday afternoon.
"With confidence in our ability to scale revenue, we are doubling down in 2014 to accelerate the growth of our core user base," he said.
"One of our core values as a company is to reach every person on the planet, and in 2014 we're focused on building a Twitter that is truly accessible and valuable to everyone."
Earning results
The company posted revenue of $243 million, up 116% from $112 million year to year, while analysts had been expecting quarterly revenue to be $218 million. Twitter reported non-GAAP EPS of $0.02, which beat expectations of a loss of 2 cents.
It also posted a net loss of $511 million the company, which is more than double its quarterly revenue. The company saw a net loss of $9 million in the same period last year.
Almost all of Twitter's revenue came from advertising, which accounted for $220 million, a 121% year to year increase. Of that revenue, more than 75% came from mobile. Data licensing, and other revenue, came to $23 million, an increase of 80% year-over-year.
Of Twitter's total revenue, 27% was International, an increase of 200% year-over-year.
Timeline views reached 148 billion in the fourth quarter of 2013, an increase of 26% year-over-year, while advertising revenue per thousand timeline views reached $1.49 in the fourth quarter of 2013, an increase of 76% year-over-year.
For the full year 2013, Twitter reported revenue of $665 million, up 110% year to year, and a net loss of $645 million.
Twitter is projecting revenue of between $230 and $240 million, with adjusted EBITDA in the range of $10 million to $16 million, for the next quarter. For the full year 2014, it expects to see revenue between $1,150 million to $1,200 million, with an djusted EBITDA in the range of $150 million to $180 million.
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Startup/Business
Joined Vator on
Twitter is an online information network that allows anyone with an account to post 140 character messages, called tweets. It is free to sign up. Users then follow other accounts which they are interested in, and view the tweets of everyone they follow in their "timeline." Most Twitter accounts are public, where one does not need to approve a request to follow, or need to follow back. This makes Twitter a powerful "one to many" broadcast platform where individuals, companies or organizations can reach millions of followers with a single message. Twitter is accessible from Twitter.com, our mobile website, SMS, our mobile apps for iPhone, Android, Blackberry, our iPad application, or 3rd party clients built by outside developers using our API. Twitter accounts can also be private, where the owner must approve follower requests.
Twitter started as an internal project within the podcasting company Odeo. Jack Dorsey, and engineer, had long been interested in status updates. Jack developed the idea, along with Biz Stone, and the first prototype was built in two weeks in March 2006 and launched publicly in August of 2006. The service grew popular very quickly and it soon made sense for Twitter to move outside of Odea. In May 2007, Twitter Inc was founded.
Our engineering team works with a web application framework called Ruby on Rails. We all work on Apple computers except for testing purposes.
We built Twitter using Ruby on Rails because it allows us to work quickly and easily--our team likes to deploy features and changes multiple times per day. Rails provides skeleton code frameworks so we don't have to re-invent the wheel every time we want to add something simple like a sign in form or a picture upload feature.
There are a few ways that Twitter makes money. We have licensing deals in place with Google, Yahoo!, and Microsoft's Bing to give them access to the "firehose" - a stream of tweets so that they can more easily incorporate those tweets into their search results.
In Summer 2010, we launched our Promoted Tweets product. Promoted Tweets are a special kind of tweet which appear at the top of search results within Twitter.com, if a company has bid on that keyword. Unlike search results in search engines, Promoted Tweets are normal tweets from a business, so they are as interactive as any other tweet - you can @reply, favorite or retweet a Promoted Tweet.
At the same time, we launched Promoted Trends, where companies can place a trend (clearly marked Promoted) within Twitter's Trending Topics. These are especially effective for upcoming launches, like a movie or album release.
Lastly, we started a Twitter account called @earlybird where we partner with other companies to provide users with a special, short-term deal. For example, we partnered with Virgin America for a special day of fares on Virginamerica.com that were only accessible through the link in the @earlybird tweet.
What's next for Twitter?
We continue to focus on building a product that provides value for users.
We're building Twitter, Inc into a successful, revenue-generating company that attracts world-class talent with an inspiring culture and attitude towards doing business.
