Twitter shares fall on weak user growth

Twitter said Wednesday that it more than doubled revenue in the fourth quarter and produced a small profit. But a key measure of its future prospects — user growth — was weak and immediately sent the stock falling in after-hours trading.

The social blogging platform said it had 241 million active users at the end of 2013, 9 million more users than the previous quarter. That was the smallest quarterly increase in users Twitter has registered in several quarters.

That figure caused investors to dump the stock in after-hours trading, with shares dropping nearly 18 percent to $54.33.

In its report, Twitter said it earned 2 cents a share and reported revenue of $243 million, up 116 percent from the fourth quarter of the previous year.

The financial results were stronger than analysts had expected. But the positive figures were offset by projections that revenue will be flat to lower in the first quarter.

The company’s first earnings report since its initial public offering in November is being closely watched for clues of a social-media stock bubble ready to burst.

Consumers continue to faithfully check in to social-media sites such as Facebook daily, but analysts question the growth of the industry and the ability of companies such as Twitter to expand their advertising business enough to justify sky-high stock market valuations.

The number of Twitter users is one-fifth of Facebook’s total of 1.2 billion.

Chief executive Dick Costolo has pointed to Twitter’s role as a real-time communications tool for public commentary during live events such as the Super Bowl. Celebrities and world leaders have flocked to the site, with millions following their tweets.

“Twitter finished a great year with our strongest financial quarter to date,” Costolo said in a release. “We are the only platform that is public, real-time, conversational and widely distributed and I’m excited by the number of initiatives we have underway to further build upon the Twitter experience.”

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Cecilia Kang is a national technology reporter, writing about tech and Internet policies at the Federal Communications Commission and Federal Trade Commission and how regulations affect businesses and consumers.
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