The Washington Post

Twitter is raking in more money. But investors want it to add users.

(Mark Lennihan/AP)

Twitter shares fell fast Tuesday as the company reported that it's not picking up users as quickly as investors would like. The tumble, which saw shares down almost 11 percent after closing at $42.62 a share, came despite the fact that the company reported $250 million in revenue — above analyst expectations of $241.47 million.

The social network had a smooth debut on the public market late last year, but has had a rocky go of it after its subsequent earnings reports showed it just isn't gaining new users as quickly as many would like. Monthly active users increased just under 6 percent in the past three months — to 255 million monthly active users, from 241 million in February.

Twitter also reported that it's making less ad revenue per thousand users, a troubling statistic given the company's focus on advertising in the past quarter.

Shares plummeted, too, after the company's first earnings report in February gave the first hints that growth and user engagement were on the slide. Since then, Twitter has made some acquisitions to improve its advertising revenue and launched a redesign that's meant to make updates on the network easier to find, share and reshare. But it's still too early to tell what effects that redesign may have had on engagement overall; the new layout only started rolling out to all users last week. And some of the usability changes Twitter's made may also be contributing to the engagement drop, Twitter executives said on the call. For example, earlier changes to the layout made it so related messages appeared together — decreasing the number of clicks users have to make to see a whole conversation.

On an earnings call with analysts and investors Tuesday, Twitter did say that it was encouraged that the new users it did gain seemed to be as engaged as its existing users. Twitter chief financial officer Mike Gupta also seemed upbeat on the potential for the company to monetize its data, something that should be helped along by its recent acquisition of analysis firm Gnip.

In a statement, Twitter chief executive Dick Costolo touted the company's revenue growth and hinted that more will come now that the firm has strengthened its advertising clout with the September acquisition of mobile ad management firm MoPub.

"We had a very strong first quarter," Costolo said. "Revenue growth accelerated on a year over year basis fueled by increased engagement and user growth. We also continue to rapidly increase our reach and scale. With the integration of MoPub, we now reach more than 1 billion iOS and Android users each month, making us one of the largest in-app mobile ad exchanges in the world and the only one at scale to offer native in-app advertising."

But Twitter will face stiff competition on that front, even with that reach — especially given that Facebook is expected to announce its own mobile advertising network Wednesday at its annual developer's conference.

Hayley Tsukayama covers consumer technology for The Washington Post.
Show Comments
Most Read
DJIA -1.29%
NASDAQ -3.25%
Last Update: 02/08/2016(DJIA&NASDAQ)



Success! Check your inbox for details.

See all newsletters

Close video player
Now Playing

To keep reading, please enter your email address.

You’ll also receive from The Washington Post:
  • A free 6-week digital subscription
  • Our daily newsletter in your inbox

Please enter a valid email address

I have read and agree to the Terms of Service and Privacy Policy.

Please indicate agreement.

Thank you.

Check your inbox. We’ve sent an email explaining how to set up an account and activate your free digital subscription.