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Twitter stock plummets 18% to new low

May 6, 2014: 4:12 PM ET

Twitter's wings clipped.

Twitter is trending today on Wall Street, but for all the wrong reasons.

Shares of the social media site tumbled to a new low Tuesday, the first day that company insiders were allowed to sell the stock following the company's initial public offering.

The stock dropped 18%, sinking below $32 a share for the first time since Twitter (TWTR) began trading last November.

The sell-off comes at the end of a six-month "lock-up" period in which Twitter executives and other employees were barred from selling the 470 million shares they were granted before the company went public.

Twitter co-founders Jack Dorsey and Evan Williams, along with current CEO Dick Costolo, have said they aren't selling. They are among Twitter's biggest shareholders, but there are others who own the stock, and they appear to be selling today. The worry is that these insiders are disposing of their shares before the stock goes even lower.

A spokesperson for private equity firm Rizvi Traverse, which has an 18% stake in Twitter, did not immediately respond to a call requesting comment.

While it's not unusual for a stock to fall when the lock-up period ends, Twitter was hit particularly hard. Among the social media companies that have gone public in recent years, Twitter had by far the biggest decline on the day of its lock up expiration, according to Bespoke Investment Group. Groupon's stock (GRPN) fell nearly 8% when insiders were freed from lock up in 2012. Shares of LinkedIn (LNKD) fell more than 6% on its lock-up expiration day.

In a sign of the heavy selling, Twitter was one of the most actively traded stocks Tuesday, with more than 109 million shares trading hands. On an average day, trading volume in Twitter stock is about 13 million shares.

Related: Is Twitter the next MySpace?

Twitter shares have been highly volatile since the IPO. The stock, which was initially priced at $26 a share, soared 73% on its first day. But it really took off in December, rising to a high of nearly $75 a share just before Christmas. The stock went into a tailspin shortly after that. Twitter shares are down more than 45% so far this year.

At current prices, Twitter now has a market value of just about $19 billion. That's down from more than $44 billion at its peak in December.

Investors have been worried about Twitter's user growth. In April, the company said its monthly active user growth ticked up just 6%. In addition, the number of monthly active users viewing the service's "timeline" -- the list of tweets people write -- remained flat from the fourth quarter and down 8% year-over-year. That's not a good sign for Twitter's influence.

Many companies make up ground with strong international growth, but Twitter is struggling there as well. User growth outside of the U.S. was 27% in the first quarter, down from 34% at the end of last year.

The slowdown in user growth overshadowed Twitter's strong revenue gains in the quarter. It broke-even in terms of earnings.

Analysts currently expect Twitter to report a modest loss for the second quarter, though they believe it will turn a profit this year, according to FactSet. Revenue is expected to continue growing a a robust pace, however.

Today the stock has one trend: #lower.

-- CNNMoney's Matt Egan contributed to this report.

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Ben Rooney
Ben Rooney
Staff writer, CNNMoney

Ben Rooney is a staff writer for CNNMoney. He covers the European debt crisis and other international finance stories, in addition to writing about stocks, bonds, investing and other Wall Street-related news. Follow Ben on Twitter: @ben_rooney

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