That’s the big question the social media company faces after disappointing usage stats reported yesterday resulted in a massive sell off of its stock. The share price is down nearly 22% in mid-day trading — equal to $7.9B in market value — after it reported last night that domestic monthly active users, at 54M, grew just 2% vs Q3 while international usage was up 4% to 187M. That slower-than expected growth eclipsed the fact that Twitter beat analysts’ revenue and cash flow forecasts, and offered encouraging financial guidance for 2014. CEO Richard Costolo told analysts not to worry: He plans to make Twitter easier to use for people who don’t want to learn the service’s hashtags and other techie symbols. “It’s not just get it in the first weeks and months on Twitter. It’s get it in the first moments, the first day on Twitter,” he said. But Bernstein Research’s Carlos Kirjner, for one, is unimpressed, noting this morning that “current user growth rate is so anemic given the service’s penetration level” that it’s “unwise to assume for investment purposes” that Twitter will see a meaningful turnaround. Sterne Agee’s Arvind Bhatia shares the concern as he downgraded the company to “underperform” noting that the Q4 performances will “raise questions on how mainstream the Twitter platform can be in the long-term.” And BMO Capital Markets’ Daniel Salmon urged clients to exercise “caution” since Twitter “will likely become a ‘prove it’ story.” Nomura’s Anthony DiClemente is less concerned about the trends, but says that the company’s stock price is still so high compared to its rivals that “an even higher valuation target [is] difficult to justify.”
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