Dick Costolo got his start as a standup comedian, but on Wednesday afternoon he didn't have the best material to work with.
The Twitter CEO faced a tough crowd during the company's first earnings call since going public in November. Analysts bombarded Costolo with questions about the social network's slowing user growth and declining engagement. At least one of the questions was particularly harsh:
"If you triple the number of domestic users you add in a quarter to 3 million, it would take you about 12 years to get to 200 million users," Carlos Kirjner, an analyst with Sanford Bernstein, asked during the call. "Do you think Twitter will get to 200 million U.S. domestic — U.S. users with, say, five or six years?"
Costolo's answers to this and other questions did little to appease investors. When he started talking, Twitter's stock was down about 13%. When the earnings call ended, the stock was down 18%. It ended up dipping more than 20% overnight.
See also: Twitter: What to Expect in 2014
"Based on our conversations with investors, it seems like people generally walked away confused about what led to the user growth weakness and the company's strategy to turn that around," Shyam Patil, an analyst with Wedbush Securities.
"His tone, inflection, maybe the persona that he projected, maybe was a little bit off," says Brian Blau, an analyst with Gartner. "There was something about it [...] He seemed to have this excitement in his voice that maybe didn't necessarily match the situation that's going on with Twitter."
Though Twitter beat Wall Street estimates for revenue for the December quarter, the social network added just nine million monthly active users in the quarter — only one million in the U.S. — and saw engagement decline from the previous quarter.
One investor we spoke with criticized Costolo for leaning too heavily on buzzwords to explain these trends and coming off a little too much like a "sales guy." Others, like Blau, just felt that Costolo displayed too much "excitement" considering the mixed earnings report.
Costolo is certainly not a novice when it comes to public speaking, nor is he an unseasoned leader. He previously founded and later sold FeedBurner to Google and joined Twitter as its chief operating officer in 2009. But this is his first time serving as the CEO of a public company and dealing with a gaggle of analysts on an earnings call — at a time when Twitter had some bad news to deliver.
"I don't think we should take anything away about his leadership skills, or ability to run this company," says Arvind Bhatia, an analyst with Sterne Agee. "I just think that yesterday, there was a tremendous amount of pressure on him to highlight a lot of the positives of the company at a time when the user growth had stalled a bit in the U.S... What we heard was a little bit of nervousness and concern."
He added: "If the user metrics had been strong and he had the same presentation yesterday, I don't think people would have cared."
Twitter and Costolo are in good company. The day after Facebook had its first earnings call as a public company, its stock hit a new low driven by concerns about its ability to make the shift to mobile.
Mark Zuckerberg, Facebook's CEO and cofounder, was on that first earnings call, but as Blau points out, Zuckerberg had a little bit more help. Sheryl Sandberg, Facebook's COO, and David Ebersman, the company's CFO, were also on the call and took many of the questions.
"[Zuckerberg] had a number of other people on that call too, so he didn't talk that much compared to Dick," Blau says. Costolo was accompanied on the call by Mike Gupta, Twitter's CFO, but he weighed in on every question on the call.
Costolo did manage to squeeze in one joke about calling his mom at the very end of the call, but even this received some criticism online.
Dick Costolo nervously signs off the Twitter call promising to call his mom. Dude really needs to work on his conference call game.
— Heidi N. Moore (@moorehn) February 5, 2014
Welcome to Wall Street. Everyone's a critic.