Twitter (Nasdaq: 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 as much as 15 percent in extended trading.

 There were 241 million monthly active users in the fourth quarter, Twitter said in a statement today, up 30 percent from 185 million a year earlier and slower than 39 percent seen in the prior period. Usage also declined, with 148 billion views of Twitter timelines compared with 159 billion views in the prior quarter. Net loss was $511.5 million compared with $8.7 million a year earlier, and was 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. and Inc., even though the microblogging service is unprofitable and some of its early rapid growth may be leveling out. 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-advertising 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.”

Stock Falls

The stock dropped in extended trading after declining less than 1 percent to $65.97 at the close in New York. Twitter has more than doubled since it debuted on the stock market at $26 a share on Nov. 6. Twitter trades at 33 times projected 2014 sales, making it pricier than Facebook Inc., at 17 times, and LinkedIn Corp., at 12 times.

Revenue was $243 million in the fourth quarter, up from $112 million a year earlier, the San Francisco-based company said. Analysts had projected an average $218.1 million, according to estimates compiled by Bloomberg. About 75 percent of Twitter’s advertising revenue came from mobile devices.

Twitter said its fourth-quarter net loss was driven by a $521 million stock-based compensation expense, while the company’s total spending jumped to $752 million, up more than six times from $121 million a year earlier.

User Engagement

Brian Blau, an analyst at Gartner Inc., said the slowing user growth was troubling, given that Twitter’s advertising business depends on more people spending time on the service.

“They’ve got some user engagement issues,” said Blau. “What I don’t see here is any kind of formula that says they’ve got the killer gigantic big kinds of products and revenues that you see from companies like Facebook and Google. They’re trying to fix it, but they’re not there yet.”

Still, Twitter forecast first-quarter revenue of between $230 million to $240 million, topping analysts’ estimates of $214.9 million, according to data compiled by Bloomberg. The company said revenue for the full year could reach $1.15 billion to $2 billion. It projected 2014 capital expenditures of as much as $390 million.

Twitter, which initially didn’t price its IPO aggressively, is seeking to avoid the fate of some other Internet companies that went public in the past few years that were hyped at the time of their offerings. Facebook, Groupon Inc. and Zynga Inc. all dropped more than 50 percent within a few months of their initial share sales. While Facebook’s stock has since recovered, Groupon and Zynga remain below their IPO prices.

Facebook last week said quarterly revenue rose 63 percent from a year earlier, with more than half of advertising sales coming from mobile devices, while net income increased more than eightfold. The results sent the social network’s stock soaring.

Mobile Ads

Twitter is trying to capitalize on the growth of advertising on smartphones and tablets, where most of its users spend their time. The company has added features for advertisers, such as one that lets them target people who are already interested in a brand’s products. Twitter is also working to expand promotions outside of its social network after acquiring a MoPub, a mobile ad exchange.

The company has stepped up the pace of its product development in order to attract users. Twitter began highlighting images in timeline feeds over the past few months and enabled people to send photos through direct messages, in competition with applications such as Facebook’s Instagram and Snapchat Inc.

Twitter isn’t predicted to make a profit until 2016. Analysts have been split on the company’s potential, with price targets as low as $20 from Hudson Square Research or as high as $75 at Stifel Nicolaus.