Twitter's stock fell more than 10 percent after hours to $38.05, below its post-initial public offering low of $38.80 on Nov. 25.
Perhaps most worrying, the San Francisco-based company said its 255 million monthly users, on average, appeared to check the service less frequently than a year ago.
The results revealed slowing momentum at a company that exuberant investors just six months ago had argued could one day match Facebook Inc's scale. At its peak in December, Twitter enjoyed a $46 billion market capitalization on just $665 million of revenue in 2013, making it one of the world's priciest stocks.
But cracks began to show in February, when Twitter disclosed that user growth had fallen to its lowest rate in years, prompting Chief Executive Dick Costolo to promise tweaks to Twitter's design.
Expectations of Twitter growing into a communications utility that Facebook has become are "unrealistic and divorced from reality," said Brian Wieser, an analyst at Pivotal Research. "Twitter is and will remain a niche medium, and a very powerful one."
On a conference call Tuesday, Costolo repeatedly told Wall Street analysts that tweets from the Academy Awards show in March have been viewed more than 3 billion times online and mentioned countless times more on radio and television shows.
"Twitter - the platform - we believe is already incredibly mainstream," Costolo said. The challenge, he added, was to convince the world to see the "value of the logged-in experience."
Although overshadowed by the usage figures, Twitter posted better-than-expected revenues of $250 million. The company, which has been steadily refining its targeting capabilities, also showed signs it is better able to present ads based on what it thinks each user would be interested in, and is thus able to command higher ad prices.
Twitter said its advertising revenue per thousand timeline views, which measures the effectiveness of its ads, nearly doubled to $1.44 over the past year.
Excluding certain items, Twitter broke even against Wall Street expectations of a 3 cent per share loss. But the company said its net loss in absolute terms widened nearly fivefold to $132 million from $27 million a year ago.
In May, shareholders can sell to sell up to 489 million shares, or 83 percent of Twitter shares outstanding. The company said Tuesday it would not hold a secondary sale to avoid flooding public markets with employee shares.
Twitter said in a securities filing earlier this month that co-founders Jack Dorsey and Evan Williams, as well as Costolo and venture capital firm Benchmark had no intention of selling their shares upon the lockup's expiration.
© Thomson Reuters 2014