Twitter Inc. shares tumbled late Wednesday after the company reported weaker than expected user growth and timeline views. Twitter said it had 184 million monthly active users in the fourth quarter, lower than the consensus expectation of 249 million. Twitter's timeline views also reached 148 billion in the quarter. Analysts were expecting nearly 174 billion. Revenue and earnings were "good, but users and timeline views were weak," Wedbush analyst Shyam Patil told MarketWatch.

Twitter said its fourth-quarter revenue more than doubled thanks to a surge in advertising spending, suggesting that the short messaging services' efforts to woo Madison Avenue are paying off.

Shares of Twitter, which have more than doubled since the company's initial public offering in November, fell more than 10% in after-hours trading despite the better-than-expected results.

Twitter's results for the three months through December signal it is still early days for the seven-year-old San Francisco company. Revenue rose to $242.7 million from $112.2 million, at a slightly faster rate than earlier quarters in the year.

But Twitter remains unprofitable as costs continued to grow faster than revenue. For the fourth quarter, Twitter said its net loss widened to $511.5 million, or $1.41 a share, compared to a prior-year loss of $8.7 million, or seven cents a share. The increased costs were attributed to research and development, and sales and marketing.

Excluding a significant increase in stock-based compensation costs in the latest period, as well as other items, Twitter posted an adjusted profit of two cents a share in the latest period.

Analysts, on average, estimated that Twitter would post a loss of two cents a share on revenue of $218 million, according to Thomson Reuters.

Part of the boon in revenue is owed to consumers' rapid shift to mobile. Twitter said about 75% of its advertising revenue now stems from mobile devices, up from over 70% the preceding quarter. Facebook Inc. last week said advertising on mobile devices for the first time generated more than half of its quarterly revenue.

Twitter continued to recruit new users to its site. Twitter averaged 241 million active users per month as of the end of 2013, an increase of 30% year-over-year.

Looking ahead, Twitter sees 2014 revenue between $1.15 billion to $1.2 billion, with revenue for the first quarter of the year expected to range between $230 million to $240 million.

Analysts had expected $1.14 billion in revenue for 2014, with first quarter sales expected to total $215 million.

http://online.wsj.com/news/articles/...65091350326808

Twitter said it averaged 241 million monthly users, up just 3.8 percent from the previous quarter — the lowest rate since Twitter began disclosing its user figures. Twitter's user numbers grew at 10 percent, 7 percent, and 6 percent during the first three quarters of the year, respectively.

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A small pile of Twitter shares could be freed to the market this week as agreements that barred employees from selling a portion of their shares after the IPO expire.

On Saturday, Twitter employees may elect to sell as much as 9.9 million shares. The expiration is the first opportunity company employees will get to cash out.

Lockup expirations typically attract short sellers and can significantly sink stock prices – as was witnessed when the sales bans at Facebook began to lift. Shares at the social networking giant tumbled 6.4% to a new low when the first batch of shares became eligible for sale in August 2012.

But Twitter took a different tact from Facebook, much like the way its relatively smooth IPO had taken a decidedly distinct approach.

This first chunk of shares available for sale is small. It represents just 1.8% of outstanding shares and is mainly to give non-executive employees a way to settle income tax expenses from vesting shares. In comparison, Facebook freed more than 271 million shares — or nearly 13% of those outstanding, in the first lockup. Four more expirations for Facebook shareholders came up over the next nine months, releasing 1.4 billion more shares into the market place. The biggest release came 181 days after the IPO, as will Twitter’s.

On May 6, the rest of the 474.7 million shares will start to be eligible for sale. That includes shares held by Twitter’s executives, directors and owners with big stakes in the company, such as early backers Benchmark Capital, Union Square Ventures and Rizvi Traverse. Twitter didn’t specify in its IPO filing the exact sale dates for the remainder of these shares.

No insiders were allowed to sell shares in Twitter’s IPO, unlike Facebook’s offering in which more than half of the shares sold came from early investors and executives.

The volatility that usually accompanies lockup expirations — largely because the scales of supply and demand are tipped — prompts interest from short sellers.

Donald Dion, who runs DRD Investments LLC and is short on Twitter, said he’ll be looking at how the stock reacts in the days leading up to the lockup expiration and Monday. He anticipates the stock will go down prior to the expiration.

Twitter’s stock has been fickle in recent weeks. The stock still hasn’t fully recovered after a disappointing earnings report sent the shares down as much as 24% last week. Twitter’s stock inched up 0.25% to $57.03 Thursday morning. It had reached a high of $74.73 in late December.

Overall, Mr. Dion expects this lockup to be more of an indicator of what will happen at the 180-day mark.

“It’s a small test for what will happen on May 6 when more people can sell,” he said.

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Twitter booked a net loss in the first quarter because of stock compensation costs, but its results surpassed Wall Street's expectations thanks to a sharp increase in advertising revenue.

Twitter Inc. said Tuesday that it had a loss of $132.4 million, or 23 cents per share, in the January-March quarter. That compares with a loss of $27 million, or 21 cents per share, a year ago when Twitter was still privately held.

Revenue more than doubled to $250 million from $114 million.

Analysts had expected an adjusted loss of 3 cents per share on revenue of $241.5 million.

Twitter says it had 255 million monthly users at the end of March, up 25 percent from a year ago.

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According to a small Raymond James survey asking “general consumers” which sites they use, 34% of respondents said they use Twitter, compared with 77% who use Facebook . Among the Twitter users, 57% said they are on Twitter “to stay up-to-date on information of interest,” but 52% of Twitter nonusers said they consider the service “a waste of time.”

At the same time, a separate survey conducted by Piper Jaffray this month showed Twitter is gaining traction with teens. About 59% of the 7,200 surveyed teens said they use Twitter, making it the second-most used social media site by teens after Instagram.

Twitter grabbed 0.5% of global digital ad revenue in 2013, which is expected to increase to 0.8% this year as digital ad spending increased to $140.7 billion, according to eMarketer.

Facebook, meanwhile, is expected to account for 8% of the global digital ad market this year.

Twitter’s strength lies in the consumers’ continued migration to mobile. Twitter is expected to account for 2.6% of the $36.46 billion mobile ad this year, according to eMarketer. In comparison, Facebook, which has five times as many users, is expected to account for 20.4% of the global mobile ad market in 2014.