Twitter gave a disappointing revenue forecast and reported slower user growth than expected, pushing shares of the microblogging company down about 13% on Wall Street last night.
The forecast came despite Twitter beating third-quarter profit and revenue estimates.
This suggested that more time is needed for a turnaround as social media competition grows from the likes of Facebook's Instagram and Messenger apps.
Twitter last night forecast fourth-quarter revenue of $695m and $710m, well below analysts' average estimate of $739.7m according to Thomson Reuters I/B/E/S.
Twitter executives gave no reason for lowering the forecast. But analysts said it could be due to anemic user growth and Instagram's advertising share growth after opening up its platform to all advertisers in September.
Twitter had 320 million average active monthly users in the third quarter, up from 316 million in the previous quarter, missing analysts' expectations of 324 million.
This is Twitter's first earnings report since Jack Dorsey returned in early October as its permanent chief executive.
As interim CEO in the prior quarter, he delivered a downbeat view of Twitter's earnings and criticised its product lineup.
Executives said savings from staff cuts would be invested in top priority products that they did not identify.
"We're still hiring and investing in talent in ways that specifically serve our priorities," Dorsey said on the conference call after the earnings report from the company he co-founded in 2006.
"We're also looking at some more bold rethinking and some more bold experiences that really speak to some patterns that we've seen on Twitter from Day One," he added.
Since early October, Dorsey has launched Moments, which showcases Twitter's best tweets and content; laid off over 300 employees; given back a third of his stock, about 1%, to employees; and hired former Google executive Omid Kordestani as executive chairman.
Dorsey served briefly as Twitter's CEO in 2008 before he was ousted.
Video advertising helped push up advertising sales in the quarter under review, the company's chief operating officer Adam Bain said.
Twitter surpassed 100,000 active advertisers in the third quarter and began making money from logged out users, or those without accounts who visit the site, he noted. In the second quarter,
Twitter's number of monthly average users grew at the slowest pace since it went public in 2013.
Revenue rose 57.6% to $569.2m in the quarter.
It said its net loss narrowed to $131.7m, or 20 cents per share, in the quarter ended September 30 from $175.5m, or 29 cents per share, a year earlier.
Analysts had expected a profit of 5 cents per share on revenue of $559.4m, according to Thomson Reuters.
