NEW YORK (TheStreet) -- Twitter ( TWTR) isn't on track to hit the billion user tipping point. That was the verdict on StockTwits.com after the micro-blogging social network's first-quarter earnings announcement Tuesday evening.
User growth, however, disappointed. The number of monthly active users increased 25% year-over-year. Last quarter, that number increased 30% compared to the fourth quarter of 2012.
Sequentially, the number of monthly active users grew 5.8% to 255 million. That growth is relatively anemic compared to, say, WhatsApp, the messenger service Facebook ( FB) acquired for $19 billion earlier this year. WhatsApp has 450 million users and is adding them at the rate of one million per day.
$TWTR after last ER TWTR collapsed 25% in one day. And their user slowdown wasn't THAT bad like this ER. Hmm...? Alex Cusack (@accounts) Apr. 30 at 08:41 AM
As of the open, Twitter had a $24 billion market cap. It trades at nearly 194 time expected 2015 earnings. On Wednesday, many investors doubted Twitter would enjoy such high multiples for long. About 49% of users anticipated further declines, according to StockTwits' analytics. The stock has already declined nearly 50% from its 52-week high.
$TWTR The results from the ER aren't really surprising. Growth is anemic and the monetization strategy they have in place is unworkable.
? Rich (@Fickle) Apr. 30 at 06:22 AM The bears doubt Twitter will reach the billion user tipping point that Facebook CEO Mark Zuckerberg singled out as the level when a Web service goes from a fun thing people do to an incredibly useful utility that warrants a $20-plus billion valuation. According to Zuckerberg, a service with a billion users is so pervasive that it can monetize without fear of user flight. Facebook itself has more than a billion mobile users, according to its first-quarter earnings report, released earlier this month.
If Twitter doesn't hit the billion tipping point, some investors fear it could become a niche network.
Most bullish investors see little chance of that happening. They note that Facebook fell below its IPO price during its first year as a public company on user growth concerns.
However, it rebounded sharply after it accelerated mobile user growth and revenues. Facebook now trades at $58, nearly 53% above its $38 IPO price.
? Alessandro Ruocco (@pelias) Apr. 30 at 08:12 AM Other investors are not so sure that Twitter can become a billion-user utility. And those concerns are casting doubt on the valuations of other social media companies that trade at high, double-digit multiples, such as LinkedIn ( LNKD).YELP) each opened down about a percent. Facebook also edged lower Wednesday. Yelp closed down 1.02% at $58.32; FB added 2.8% to close at $59.78 and Twitter dropped 8.56%, ending at $38.97.
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.