Business

Twitter Isn't Growing Users Fast Enough For Wall St.

Twitter's third-quarter earnings report didn't meet expectations, causing the company's stock to drop 10 percent in after-hours trading Monday.

Twitter Isn't Growing Users Fast Enough For Wall St.
Getty Images / Justin Sullivan
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Doubled revenue and millions of new users weren't enough to save Twitter from Wall Street's disdain Monday. The company's third-quarter earnings report caused Twitter stock to drop 10 percent in after-hours trading.

The report notes Twitter pulled in about $361 million in revenue over the past three months, up 114 percent from the same time last year. The company also reported monthly active users increased by 23 percent to 284 million.

But that's not as much growth as investors had hoped for, and Twitter's low fourth quarter projections caused the company's stock to sour.

BLOOMBERG: "That's more users than they had in the previous quarter but not as fast growth. And that's bad news for Twitter, because this is still a very small number when you look at the over 1 billion, 2 billion people on Facebook."

The New York Times notes the company is still technically losing money — 26 cents per share — despite its strong revenue, thanks to stock compensation packages for its employees. Factor that out, and the company turned a profit of 1 cent per share, in line with expectations.

Twitter CEO Dick Costolo downplayed the concerns about user growth in a CNBC interview, saying the numbers didn't factor in engagement from logged-out users or syndicated content on other platforms.

But one analyst told the BBC at its current price, Twitter needs to do more than just meet analysts predictions. "Expectations were high. People expect more than just in line."

The earnings report also noted Twitter does most of its business on mobile devices — 80 percent of its monthly active users logged in from mobile devices.

This video includes images from Getty Images.