Twitter Inc.'s after-hours trading stock plunged on April 26 by up to 11 percent after the social network missed revenue estimates by analysts.
Twitter's first-quarter revenue, which ended on March 31, surged from $435.9 million to $595 million in the same period last year. However, the final figures missed analysts' average estimates of $607.9 million based on Yahoo Finance's poll.
The net loss was 12 cents a share ($79.7 million) as compared to last year's net loss of 25 cents a share ($162.4 million).
The stock plunged even though Twitter managed to grow its monthly active users by approximately 310 million from 5 million in the first quarter of the year. Analysts' estimate was 308 million.
"The concern that dismal user growth would eventually affect revenue growth is starting to show up in Twitter's results," said Bloomberg Intelligence senior analyst Jitendra Waral.
Twitter's streak of user growth slowed down since the 2013 public offering had been criticized by investors. In 2015's last quarter, the social network did not garner new active participants.
Twitter credited its "seasonality and marketing initiatives" for its recent surge in user base. These initiatives took place during the periods of the Super Bowl and the Academy Awards.
These events enabled more traffic to the social network. However, these could also indicate a short-term surge.
In an interview, Twitter chief financial officer Anthony Noto said they received lower demand from their branded advertisers than what was expected.
"Can we turn it around? We're driving very strong revenue and revenue growth with these advertisers, they just didn't spend as much as we had thought they would spend, and we're in a transition period," added Noto.
Prior to the earnings report, RBC Capital Markets analyst Mark Mahaney said there is a risk that the social network could be a "deteriorating asset."
Mahaney added that he has not seen enough user experience improvements on the product that was better than what people experienced in the past years.
It's no secret that Twitter has had a tough few months this year. In January alone, the social network lost five top executives in just one weekend. Last month, the company also decided to give away stock bonuses to employees to prevent them from leaving.
Photo: Jason Howie | Flickr
