Twitter Loss Exceeds Estimates as User Growth Slows
Twitter Inc. (TWTR) posted slowing user growth and a net loss that was wider than analysts’ estimates in its first earnings report as a public company, sending shares down in extended trading.
Twitter said in a statement today that it had 241 million monthly active users, up 30 percent from 185 million a year ago, with the rate of growth slowing from 39 percent in the prior period. Net loss was $511.5 million compared with $8.7 million a year earlier, and more than double analysts’ projections of $253.5 million.
The results indicate that Twitter may find it difficult to justify its $37.4 billion market capitalization, a valuation that is higher than Target Corp. (TGT) and Salesforce.com Inc. (CRM), even though the microblogging service is unprofitable. Since its November initial public offering, Twitter’s stock has soared on optimism that sales will grow as the company rolls out new targeting and mobile ad products.
“It’s at a ridiculous premium,” said James Gellert, chief executive officer of Rapid Ratings Inc., a New York-based firm that uses quantitative models to grade securities. “The momentum of the stock isn’t based on the current fundamentals of the company. It’s based on the promise of the future business.”
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http://www.bloomberg.com/news/2014-02-05/twitter-loss-exceeds-estimates-as-user-growth-slows.html