San Francisco - Twitter, the microblogging service that has amassed more than 200 million users in seven years, is struggling to widen its audience as quickly.
The San Francisco-based social network, which posted its first earnings report on Wednesday since going public in November last year, said its monthly active users totalled 241 million in the fourth quarter, up 30 percent from 185 million a year earlier as growth slowed from 39 percent in the prior period. Usage dipped, with 148 billion views of timelines compared with 159 billion views in the third quarter.
While chief executive Dick Costolo said he was focused on reversing the trend, the stock plummeted 23 percent in early trading.
The results raised concerns that the service’s easy growth phase is ending. As recently as a year ago, Twitter, which began in 2006 and lets people communicate through 140-character messages, was adding new users at rates of more than 60 percent a year and timeline views were soaring.
If the usage declines continue and new members join more gradually, the unprofitable company may fall short of its goal to be a mainstream service like Facebook and may find it difficult to justify its $34.7 billion (R385.5bn) market capitalisation, which makes it more valuable than Target and Salesforce.com.
“Twitter needs to answer the question about whether it can ever become a mass-market product, or whether it’s more destined to be a niche for news junkies,” said Robert Peck, an analyst at SunTrust Robinson Humphrey, which has the equivalent of a hold rating on the stock. “Depending on how fast it’s growing, that’s what we’re willing to pay for it.”
Costolo said the company had a plan to increase the number of users and engagement, primarily by making the site easier to use. “Up until last year, our growth has been viral and organic.” Now “it will be a combination of changes introduced over the course of the year that will start to change the slope of the growth curve”.
Twitter’s stock fell as low as $50.54 in early trading, following a decline of less than 1 percent to $65.97 at Wednesday’s close in New York. It trades at 33 times projected 2014 sales, making it pricier than Facebook, at 17 times, and LinkedIn, at 12 times. – Bloomberg