This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Twitter Drops Sharply As User Growth Continues to Slow

Updated from 4:54 p.m. to include analysis on analyst comments in the xx paragraph.

NEW YORK (TheStreet) -- Twitter (TWTR) shares plunged after the social network posted first-quarter results that were better than what Wall Street expected, as the company topped 255 million monthly active users.

For the first quarter, Twitter posted breakeven results on $250.49 million in revenue, as advertising revenue surged 125% year over year to $226 million. The company said mobile advertising revenue was approximately 80% of total advertising revenue, while data licensing and other revenue totaled $24 million, an increase of 76% year-over-year.

When the company reported fourth-quarter results, it gave guidance. The company said it expected revenue to be in the range of $230 million to $240 million, with Adjusted EBITDA between $10 million and $16 million. Analysts surveyed by Thomson Reuters were expecting the San Francisco-based Twitter to lose 3 cents a share on $241.47 million in revenue.

The company reached 198 million mobile monthly active users (MAUs) during the quarter, up 31% year-over-year. Timeline views reached 157 billion for the first quarter of 2014, an increase of 15% year-over-year, and advertising revenue per thousand timeline views reached $1.44 in the first quarter of 2014, an increase of 96% year-over-year. Though the company surpassed 255 million MAUs, up 25% year-over-year, the growth is slowing down. In the fourth-quarter of 2013, MAUs grew 30.% year over year.

"We had a very strong first quarter. Revenue growth accelerated on a year over year basis fueled by increased engagement and user growth," said Dick Costolo, CEO of Twitter in the press release. "We also continue to rapidly increase our reach and scale. With the integration of MoPub, we now reach more than 1 billion iOS and Android users each month, making us one of the largest in-app mobile ad exchanges in the world and the only one at scale to offer native in-app advertising."


WATCH: More market update videos on TheStreet TV | More videos from Kori Hale

Initial reaction on Wall Street was negative, as Wall Street continued to question user growth. Sterne Agee analyst Arvind Bhatia, who rates shares "neutral" noted the results were a mixed bag. "1Q'14 results were mixed," Bhatia wrote in a note to clients shortly following the results. "Revenue and adjusted EBITDA exceeded expectations while monetization per user was in line. User metrics, including reach and engagement, were slightly better than 4Q but not as strong as the street expected. 2Q guidance is essentially in line. Full year guidance raised slightly."

Twitter shares plunged in after-hours trading, losing 10.2% to $38.26.

Twitter gave guidance for both the second-quarter and fiscal 2014 in its first quarter release. The company said it expects revenue to between $270 million and $280 million in the first-quarter, with adjusted EBITDA between $25 million and $30 million. For the full year, revenue is projected to be between $1.2 billion and $1.25 billion, with adjusted EBITDA between $180 million and $205 million. It also expects capital expenditures between $330 million and $390 million.

Shares of Twitter closed the regular session higher, gaining 4.6% to close at $42.62.

--Written by Chris Ciaccia in New York

>Contact by Email.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,954.02 -129.78 -0.76%
S&P 500 1,979.13 -8.85 -0.45%
NASDAQ 4,446.9750 -25.1330 -0.56%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs