Twitter stock plummets 18% to new lowMay 6, 2014: 4:12 PM ET
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 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.
Ouf, $TWTR's shellacking is kind amazing tbh. Just surpassed the 2nd largest volume day (Coincidentally, The top!). Only IPO day had larger.
— Jerry Khachoyan (@TheArmoTrader) May 6, 2014
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.
Twitter's current market cap is $19 billion, the same amount Facebook spent on WhatsApp. $TWTR
— Eli Langer (@EliLanger) May 6, 2014
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.