The Twitter (NYSE:TWTR) IPO was much more successful than its performance after the first earnings call as a public company. In management's defense, it may have been impossible to live up to the hype.

As mentioned in the article Twitter, Another Successful Goldman IPO, there were two issues that investors locked in on that should be viewed as speed bumps in the move forward rather than a reversal of course. These speed bumps brought expectations down, and there are now signs of capitulation. The company has taken shareholder-friendly steps to stabilize its stock price and offer a new revenue stream, which may provide stability going forward. It may be hard to justify the valuation from an earnings perspective, but this also might be the only other opportunity to buy shares close to the post-IPO low.

Stiff competition
Facebook (NASDAQ:FB) tracks the greatest number of monthly active users at 1.2 billion, which dwarfs Twitter's 241  million, according to SEC filings. The bigger issue may be sell-through, however. In both cases, the link to sell-through has been has difficult to quantify. Priceline CEO Darren Huston recently discussed in an interview with Bloomberg how Google (NASDAQ:GOOG) has the most tangible link to sell-through when compared with Facebook and Twitter. He went on to say that he has an open wallet for Facebook and Twitter if they can prove their worth. However, like Google, Twitter has the ability to insert related links into topical searches so this connection to sell-through may be clearer in the future.

Slowing monthly active users
The biggest issue with the fourth quarter was monthly active users, or MAU, slowing to 9% sequential growth. Slowing growth in a company with no profits is a huge concern, but there is a strange issue associated with MAU. Twitter doesn't count all of its users. In the company's 10K, in the key metrics section, you'll find the following language:

We define timeline views as the total number of timelines requested and delivered when registered users visit Twitter, refresh a timeline or view search results while logged in on our website, mobile website or desktop or mobile applications (excluding our TweetDeck and Mac clients, as we do not fully track this data ).

MAU may be higher than reported
If the company isn't tracking all of the users that log in, it's possible that the MAU being reported is understated. It would be reasonable to assume that these will be tracked in the future and the resulting data might prove to be a catalyst.

Since advertising clients pay only for click-throughs, it's likely that this won't impact profitability over the long term. In the future, as the industry matures, payment levels will be about results -- sales, not marketing.

New revenue source
In mid-March, TechCrunch outed Ben Whitelaw, a Twitter employee testing promoted accounts. Promoted accounts will join promoted Tweets and promoted trends as ways for Twitter to generate income. Essentially, it allows a person to build a Twitter following faster by more widely distributing the user's tweets.

Expectations have come in, but valuation is still high, creating an interesting dilemma for someone who likes the company almost as much as cash flow. We should have more information soon, since Twitter is reporting quarterly results on April 29. The consensus for monthly active users is 255 million. In addition to revenue and EPS, this will be the metric to watch.

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David Eller has no position in any stocks mentioned. The Motley Fool recommends Facebook, Google-Class C Shares, and Twitter. The Motley Fool owns shares of Facebook and Google-Class C Shares. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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