Twitter shares plummet on hits to user growth, usage

The good news was that total monthly active users jumped to 241 million. The bad news: the growth ain't what it used to be, and Twitter's design is partly to blame.

Twitter CEO Dick Costolo might not be smiling today.
Twitter CEO Dick Costolo might not be smiling today. Daniel Terdiman/CNET

Twitter shares have slid more than 22 percent in early trading Thursday as shareholders take a step back on word of a disappointing fourth quarter.

The dip -- to just over $50, well down from the Wednesday closing price of $65.97 -- comes after Twitter acknowledged Wednesday that while its total monthly active user tally is up to 241 million, a 30 percent increase year over year, its service's design poses too much of a challenge for users to actually use the service, hence the slowdown in the growth of new users. Twitter also expressed concern that existing users are employing its service less often.

Soon after the news was announced, Twitter's shares on Wednesday dropped more than 18 percent in after-hours trading. In pre-market trading on Thursday, shares were down 23 percent.

Twitter's earnings news has also sent shock waves through the analyst community. On Thursday morning, Sterne Agee analyst Arvind Bhatia downgraded Twitter to a rating of "underperform." He now believes that Twitter's shares will fall to $43 over the next 12 months.

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About the author

Don Reisinger is a technology columnist who has covered everything from HDTVs to computers to Flowbee Haircut Systems. Besides his work with CNET, Don's work has been featured in a variety of other publications including PC World and a host of Ziff-Davis publications.

 

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