Twitter is a real-time online social networking platform that allows users to post messages of up to 140 characters as well as photographs and links to other websites. These are known as tweets. It was founded in 2006 by Jack Dorsey. As of 2012 it reported over 500 million active users generating over 340 million tweets daily, making it one of the world's most visited websites.
Twitter's stock falls 18 per cent on paltry growth in users
Twitter reported its slowest pace of user growth in recent history, dimming hopes the social media phenomenon can sustain its torrid pace of expansion and wiping out nearly a fifth of the company's value in after-hours trading.
The San Francisco company on Wednesday posted better-than-expected fourth-quarter revenue of US$243 million in its first results as a public company.
But investors focused on the anaemic user growth, as well as a severe decline in timeline views, a measure of user engagement.
Twitter, which held a highly anticipated initial public offering in November at US$26 a share, has divided investor opinion in recent months, as shares raced to more than US$66.
Twitter's valuation has been based in part on the belief it could expand its mainstream appeal and eventually become as ubiquitous as Facebook, which has five times as many users.
User growth, a closely watched measure, sputtered. Twitter averaged 241 million monthly users in the December quarter, up just 3.8 per cent from the previous three months - the lowest rate of quarter-on-quarter growth since Twitter began disclosing user figures.
"What this report will do is it will question how mainstream is Twitter as a platform," said Arvind Bhatia, an analyst at Sterne, Agee & Leach.
"Both in the US and internationally, the monthly active user base did not grow as fast as people thought, and that has an impact on the number of timeline views."
Shares fell sharply after hours on Wednesday to US$54, down about 18 per cent from a close of US$65.97 on the New York Stock Exchange.
The tumble came as a rude jolt for investors who had bid up Twitter shares to about 30 times this year's projected sales, based on its Wednesday closing price - or more than twice as expensive as Facebook or LinkedIn.