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Twitter counts on new math to show user growth, stock tanks

Using a new way to tally active tweeters, the microblogging service says it added users in the first quarter. Even so, sales fell short.

How many users does Twitter have? It's all in how you do the counting.

Twitter

Twitter may be making some inroads winning over people who have little interest in tweeting.

Put the emphasis on "may be" because the company for the first time didn't include SMS fast followers -- people who can receive texted tweets even if they haven't signed up for Twitter -- in its count of monthly active users.

Based on the new tally, Twitter on Tuesday said that 310 million people tweeted actively in the first three months of 2016. That's up 2 percent from the fourth quarter of last year, when it had 305 million users. The revised user count both simplifies Twitter's disclosures and puts user growth in a slightly better light, especially when compared with the zero growth in monthly active users it reported in the fourth quarter of 2015.

Wall Street usually cares more about CEO Jack Dorsey's ability to attract new tweeters than it does about Twitter's sales and profit since user growth signals Twitter's chances of reaching a mass-market audience. This time, though, investors did care about Twitter's revenue. And they weren't happy about it.

Twitter reported $594.5 million in sales for the three months ended in March, missing the $607.8 million analysts surveyed by Thomson Reuters were expecting. Profit minus some costs, such as employee stock compensation, was 15 cents a share, compared with the analysts' estimate of 10 cents.

The sales miss was enough to depress the stock, with Twitter shares plunging more than 14 percent in after-hours trading.

Dorsey is working to make the microblogging service less confusing and more visually appealing to new users. Three weeks ago, he said Twitter won the rights to stream 10 of the NFL's Thursday night games this season. (Twitter's CFO Anthony Noto was previously finance chief of the NFL.)

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