Twitter Proves It's No Facebook: What Wall Street's Saying (Update 2)

Updated from 10:07 a.m. to include thoughts from Merill Lynch.

NEW YORK (TheStreet) Twitter (TWTR) shares plunged 19.1% to $53.39 in early Thursday trading, after the micro-blogging social network showed anemic user growth, especially when compared to Facebook (FB).

San Francisco-based Twitter earned 2 cents a share on $242.7 million in revenue during the fourth-quarter, as advertising revenue surged 121% year over year to $220 million. Data licensing rose 80% year over year to $23 million. The company noted that mobile advertising revenue was more than 75% of total advertising revenue.

Analysts surveyed by Thomson Reuters were looking for Twitter to lose 2 cents a share in the fourth quarter, on $217.8 million in sales.

However, the main concern is that the company ended the December quarter with 241 million monthly active users (MAUs), up just 9 million from the prior quarter. Though the company saw 30% year-over-year growth in users, it's clear Wall Street analysts were expecting more. Twitter has just 54 million MAUs in the United States, adding only 1 million users from the prior quarter, indicating it's a mature product domestically.

Comparatively speaking, Facebook ended its quarter with 1.23 billion MAUs, of which 757 million are daily active users (DAUs).

Also troubling was the slowing timeline view growth, with the company noting it reached 148 billion timeline views, a year-over-year increase of 26%.

On the conference call, CEO Dick Costolo noted 2014 would be a year where Twitter would see sharp user growth, reaching "many more users," and that the company was taking many steps to address this. The four initiatives he laid out were a new mobile sign up process, allowing you to see which of your friends are already on Twitter, integration of richer media, making Twitter a better tool for conversation, both public & private, and doing a better job organizing content along topical lines.

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