Post date: Feb 06, 2014 5:28:36 PM
BVO - Investors looking for skyrocketing subscriber growth at Twitter - will have to twiddle their thumbs.
In its first quarterly scorecard since going public late last year - the microblog announced a rise in average monthly users of 241 million in the fourth quarter; that was slower than expected.
As a matter of fact, the growth rate of Twitter's user base was less than four percent, which was the lowest for the whole year.The results suggest getting people to sign on - not as easy in the crowded and growing field of social media, says S&P Capital IQ's Scott Kessler.
SCOTT KESSLER, HEAD OF TECHNOLOGY EQUITY RESEARCH, S&P CAPITAL IQ:
"Twitter is not the first, the second, or the third but the fourth largest global social network based in the U.S. behind Facebook, behind Google+ and behind LinkedIn and there was a reason for that because it is just not as accessible or easy to use as maybe some of those other platforms are. And then I think what's really important is the second item, which is - it costs a lot of money to invest and expand and sustain growth."
And sustaining growth, by getting more eyeballs to view advertising pitches and keeping users on the site longer - the latter which it failed to do - is key to justifying a lofty stock price. Shares were up more than 150 percent since its market debut, but tumbled double-digits immediately after the subscriber numbers were made public.
For Kessler, who already had a "sell" rating on the stock - Twitter's results confirm his belief investors are expecting too much from the young company.
SCOTT KESSLER, HEAD OF TECHNOLOGY EQUITY RESEARCH, S&P CAPITAL IQ:
"User growth and engagement growth, I think is called into question at this point. Twitter has pretty much been a momentum story, a momentum stock but it seems like in certain respects the momentum has maybe fallen somewhat when it comes to the fundamentals."
But not all the news was bad. Investors overlooked a surprise quarterly profit of two cents a share, excluding items, compared to an anticipated loss.
And a rise in revenues to $243 million, along with sales guidance for the current quarter that was above the consensus.
The only problem - if tweeters are spending less time looking at other tweets - that kind of sales grow may fly away.