What happened

Shares of Twitter Inc. (NYSE:TWTR) declined 19.1% in September, according to data from S&P Global Market Intelligence, amid fears of rising costs and government regulation.

To be sure, Twitter fell more than 11% in the days following a House of Representatives hearing on Sept. 5, in which members of Congress grilled CEO Jack Dorsey over everything from its ability to prevent hate speech to allegations of unjustified censorship and political bias.

Grey stock market charts with a yellow arrow line indicating losses

Image source: Getty Images.

So what

The questions came on the heels of ramped-up initiatives by Twitter aimed at what it called "prioritizing the health" of its platform, including the removal of tens of millions of fake and suspicous accounts earlier this year. 

But those initiatives will come at a cost. Twitter has already told investors to expect its number of monthly average users to decline into at least the third quarter, sparking concerns over whether it will be able to sustain its top- and bottom-line growth. 

Now what

Perhaps unsurprisingly, at least one analyst weighed in toward the end of September warning that rising expenses could do material harm to Twitter's profits in its third-quarter report later this month.

One the one hand, if that observation turns out to be on point -- and with shares of Twitter still up more than 50% over the past year as of this writing -- I suspect investors could be in for more pain in the coming weeks. On the other hand, if Twitter shows signs that its recent acceleration in revenue and earnings growth is sustainable in spite of higher costs (and with the looming threat of increased regulation notwithstanding), the stock could quickly recoup its recent losses.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.