Twitter, whose shares debuted at $26 on the New York Stock Exchange in November, reported better-than-expected fourth-quarter revenue of $243 million in its first results since the IPO. But investors focused on the anemic user growth, as well as a sharp decline in a measure of user engagement.
Twitter averaged 241 million monthly users in the December quarter, up just 3.8 percent from the previous three months. That was the lowest rate of quarter-on-quarter growth since the company began disclosing user figures.
But the company also said it made $1.49 per 1,000 timeline views, a 76 percent jump from the same quarter of 2012.
“We believe the accelerating user growth and engagement, supplemented by improvements in monetization, will drive continued financial outperformance in the year ahead,” Goldman Sachs analysts said in a note.
Goldman raised its target price to $69 from $65 and maintained its “buy” rating on the stock.
Twitter CEO Dick Costolo expressed confidence that Twitter’s user growth would improve in 2014 once users get used to a change in layout to help new users and take to a new onboarding process for newcomers to Twitter’s mobile app.
“Management offered lots of confidence in reaccelerating those (active user) figures, but that will likely become a ‘prove it’ story that will make stock outperformance challenging in the meantime,” BMO Capital Markets analyst Daniel Salmon said in a note to clients.
Up to Wednesday’s close, Twitter shares had risen to about 30 times projected 2014 sales.
(Reporting by Saqib Iqbal Ahmed; Editing by Ted Kerr)
Article Appeared@http://www.reuters.com/article/2014/02/06/us-twitter-results-idUSBREA141ZZ20140206