NEW YORK (AP) — Twitter's stock is sinking on worries that the short online messaging service is not popular enough.
Twitter Inc. had reported stronger-than-expected revenue and adjusted earnings in its fourth-quarter financial report Wednesday, its first as a publicly traded company.
But its user numbers signaled that growth is slowing. Twitter had 241 million users at the end of 2013. The company added just 9 million new monthly users in the fourth quarter, only 1 million of which came from the U.S. It was adding an average of 16 million new accounts in each of the first three quarters of the year.
Another closely watched metric, which measures how engaged users are with Twitter, declined during the quarter, further spooking investors. Twitter said its "timeline views," or how many times users refresh Twitter feeds, visit Twitter or look at search results, declined 7 percent from the previous quarter, to 148 billion from 159 billion.
CEO Dick Costolo sought to reassure analysts and investors during Wednesday's conference call, saying that changes Twitter made to the short messaging service during the fourth quarter are starting to pay off.
But the concerns remained. Sterne Agee analyst Arvind Bhatia cut his rating on Twitter's stock to "Underperform" from "Neutral" because of the slowing growth. He also said its stock is expensive compared to similar companies. He set a target price of $43 for Twitter's stock. This is still more expensive than Facebook and LinkedIn, based on expected revenue for the companies, the analyst wrote in a note to investors.