Twitter increases users and sales but shares slide

Twitter's investors have been worried about the site's ability to grow its user base

Twitter has reported a doubling in sales and a 23% increase in the number of active users of its micro-blogging site for the third quarter.

The firm, known for its 140 character messages, said it added 13 million monthly active users between July and September, meaning it now has 284 million users.

Sales rose 114% to $361m (£223m), but it made a loss of $175m for the period.

Its shares fell 8% in after hours trading.

Twitter chief executive Dick Costolo said it was a "very strong financial quarter".

"I'm confident in our ability to build the largest daily audience in the world," he added.

However, it predicted fourth quarter sales of between $440m to $450m, compared to average analyst forecasts of $448m.

It also reported a 7% slide in timeline views per user, a figure seen as a key measure of user engagement, which was also slightly below analyst forecasts.

High expectations

Forrester Research analyst Nate Elliott attributed the sharp share price fall to the high expectations for the firm, and said Twitter had failed to keep up with social network rival Facebook.

"Their user growth is mildly encouraging, but I want to see better. Users is their key metric; they need to get people using the site everyday. Facebook is constantly giving people new reasons to come back to the site, Twitter needs to do more of that," he added.

Twitter's shares have had a bumpy ride since they were listed on the New York Stock Exchange last November.

Its shares initially rocketed but then eventually lost almost a third of their value, before recovering to trade around $48 per share, comfortably above their initial $26 per share flotation price.

Sterne Agee analyst Arvind Bhatia said the shares' rise suggested investors had expected more from Twitter's results.

"For a stock like Twitter, which is up a bit since the last quarter, expectations were high. People expect more than just in line," he said.