Twit­ter shares nose­dived ear­li­er this week when they went on sale on the stock mar­ket for the first time.

The share price on Tues­day was the low­est lev­el they had been since the com­pa­ny made their Ini­tial Pub­lic Offer­ing (IPO) back in Novem­ber 2013, drop­ping to 17.8% and clos­ing at $31.85. It is esti­mat­ed that approx­i­mate­ly 135 mil­lion shares were trad­ed, a fig­ure ten times high­er than nor­mal. Stock mar­ket ana­lysts attrib­uted the drop in share price to the end­ing of a lock­up peri­od which stopped the major­i­ty of the share­hold­ers, most­ly ear­ly investors and com­pa­ny insid­ers, from being able to sell their shares. This is a com­mon prac­tice for rel­a­tive­ly young com­pa­nies which decide to go pub­lic, as it stops the mar­ket from being swamped with shares.

Twit­ter unable to com­pete 

The end of the lock­up peri­od arrived at the same time as peo­ple were voic­ing con­cerns about the social net­work­ing site’s abil­i­ty to attract and hold a con­ven­tion­al audi­ence. Twit­ter is often laud­ed as an indis­pens­able tool for busi­ness­es in build­ing a brand and engag­ing with poten­tial cus­tomers. How­ev­er, despite tweak­ing and improv­ing their plat­form, Twit­ter failed to per­form as well as expect­ed, fail­ing to expe­ri­ence the growth in users that tech­nol­o­gy com­pa­nies usu­al­ly enjoy. In March, Twit­ter announced that it had 255 mil­lion month­ly users through­out the world, which showed only a 5% increase from Decem­ber. U.S‑based engage­ment by its users declined by 3% in the last quar­ter and by 10% inter­na­tion­al­ly, despite over­seas being the area where growth is most expected.

Gloomy pre­dic­tions

The founder of Iron­fire Cap­i­tal, Mr. Eric M. Jack­son, said, “Twit­ter is a great ser­vice but it’s a niche ser­vice. Despite every­thing Twitter’s man­age­ment is try­ing to do to mon­e­tize its user base, I just don’t think it’s ever going to be a bil­lion-user ser­vice like Facebook.”

Twit­ter has put its recent poor per­for­mance down to the changes being car­ried out on the plat­form, such as the redesign of its pro­file pages, an improved inter­face to make it eas­i­er to upload media to posts, and allow­ing users to import their cell­phone contacts.