Twitter beat bottom-line expectations on Tuesday with break-even earnings per share, rather than the $0.03 loss investors had predicted. But that might have been the only bright spot in an otherwise disappointing first-quarter report for the social media company.
User growth on Twitter—the one metric all investors were watching—failed to impress in the company’s latest filings. Membership reached 255 million in the first quarter, but year-over-year sign-up growth slowed to 25 percent from 30 percent in Q4 2013. The rate of growth in timeline views also declined, and advertising revenue per thousand timelines fell to $1.44 from $1.49 in the previous quarter.
Shares of Twitter plunged in after-hours trading, losing nearly $4 or 9 percent off their $42.62 close on Tuesday. For Wall Street, the latest report suggests that Twitter’s attempts to expand beyond 140-character posts and make its product accessible to a broader platform of users haven’t been good enough to compete with giants like Facebook as a social media home on the Web.
The merciless reaction on the Street shouldn’t be surprising to Twitter. When the company reported lackluster user growth in first-ever public earnings in February, its stock tumbled more than 20 percent overnight, shaving some $8 billion off its market cap. Shares of Twitter have fallen 40 percent since the start of the year.