Twitter shares plummet after it reports slowest growth since 2013

The microblogging site has pinned its hopes on an increase in live streaming video advertising

Twitter has seen stagnant growth in user numbers and has not been able to generate revenue from existing users (Getty Images)

Twitter shares fell more than 10 per cent in after-hours trading on Tuesday after it reported its slowest revenue growth since going public in 2013.

Advertising revenue for the rest of the year is expected to be far below expectations.

Projected advertising sales are $590 million to $610 million for the third quarter, tens of millions less than the $681.4 million predicted by pundits.

Monthly active user growth continued to stagnate, increasing slightly in the second quarter to 313 million, up from 310 million, the company said.

Revenue rose about 20 per cent from a year ago to $602 million but was down from 36 per cent three months ago and represents the slowest growth since the company floated three years ago.

The company made a net loss of $107.2 million, or 15 cents per share, an increase from $80 million in the first quarter.

There were some positives in the figures. Earnings per share were 13 cents, higher than the average analyst estimate of 10 cents.

The microblogging site has pinned its hopes on an increase in live streaming video advertising, which is accounting for an increasing share of marketing budgets.

It is putting more video from its Periscope app into users timelines, but has yet to enjoy significant revenues from this.

To boost video sales, Twitter has signed deals to stream major sport, political and entertainment videos on its service.

In July, it agreed to stream games for Major League Baseball and the National Hockey League, having already signed a contract with the NFL to show American football matches.

Revenue from these contracts will begin to flow by the end of the third quarter, chief financial officer Anthony Noto said on a Tuesday conference call.

Video advertising is generally more costly than the traditional social media adverts that Twitter has relied on.

Twitter is also looking to define itself as the place to go for live news, updates and discussion. “We are the place for news and social commentary,” Jack Dorsey, chief executive officer, said on the call.

“At its best, our platform allows people to reach across divides.”

But some commentators were not impressed.

Patrick Moorhead, analyst at Moor Insights & Strategy told Reuters: “We are a year into Dorsey coming back and there is really no end in sight of when it is going to start picking up to where investors are going to be happy.”

Dorsey, the original founder of the company, returned as chief executive last year. Under his renewed leadership, Twitter’s shares have lost half of their value, user numbers have barely increased and Snapchat and Facebook have made inroads into Twitter’s core territory of live news and events.

Additional reporting by Reuters