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Twitter Plunges: What Wall Street's Saying

Updated from 10:06 a.m. to include additional thoughts from Sterne Agee analyst.

NEW YORK (TheStreet) -- Though Twitter (TWTR - Get Report) managed to beat first-quarter estimates and show Wall Street it's more profitable than initially thought, none of that matters if the company can't do one major thing: grow its user base.

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, a year-over-year increase of 76%. Analysts surveyed by Thomson Reuters were expecting Twitter to lose 3 cents a share on $241.47 million in revenue.

The company topped 255 million monthly active users (MAUs), but that was only an increase of 14 million from the previous quarter, its first as a public company. Though that number is up 25% year-over-year, growth is slowing. In the fourth quarter of 2013, MAUs grew 30.9% year over year.

Must Read: Twitter Drops Sharply As User Growth Continues to Slow

Some on Wall Street, including Goldman Sachs, were expecting much more. Analysts at Goldman Sachs were expecting around 265 million MAUs.


WATCH: More market update videos on TheStreet TV | More videos from Debra Borchardt

San Francisco-based Twitter did manage to reach 198 million mobile monthly active users during the quarter, up 31% year over year, as timeline views reached 157 billion for the first quarter of 2014, an increase of 15% compared to the prior year's quarter. Advertising revenue per thousand timeline views reached $1.44 in the first quarter of 2014, a year-over-year increase of 96%.

In an interview with Carl Quintanilla on CNBC, CEO Dick Costolo said Twitter was already a mainstream platform, and the company is working on three major initiatives, including simplifying the new user process to be much more mobile phone based, the recommendations sent, and the way Twitter organizes content for new users will drive growth. "The beauty of Twitter is that everyday, in countries around the world, Twitter is front and center, it's ubiquitous, in front of people, everyday," Costolo said during the interview.

Shares were plunging in pre-market trading, falling 12% to $37.49.

For the second quarter, Twitter expects revenue to be between $270 million and $280 million, 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.

Analysts surveyed by Thomson Reuters are expecting Twitter to lose 1 cent a share on $275.31 million in revenue for the second quarter, with EBITDA of $30.58 million.

Following the quarter, analysts were positive on the long-term viability of the company, but many lowered price targets, given the declining user base growth. Here's what some had to say:

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