Morgan Stanley has cut its price target and earnings forecast for Twitter.
In a note on Thursday, analysts led by Brian Nowak cut the social media firm's price target from $18 to $16.
And Morgan Stanley's projection for earnings before interest, taxation, depreciation and amortisation (Ebitda) for 2017 is down 13 per cent to $769m.
Twitter's 2017 revenue, meanwhile, is forecast to be $3.23bn, down from a previous projection of $3.43bn.
“Engagement and new user trends remain troubling,” said Nowak in his note, which estimates Twitter will add 2.6m global monthly users in 2016 and then 300,000 in 2017. Previous estimates put the 2016 figure at 5.2m and 2017 at 3.4m.
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The gains in 2016 are expected to come in the second half of the year, with Twitter benefiting from an NFL deal, the US presidential election and the summer Olympics.
The note said: “An inability for these events to deliver would likely mean even more downside to our [user] estimates.”
Twitter's “core user engagement remains in decline”, Nowak said, and it is “too early to say” whether its Moments feature, launched last year, “will fix engagement...and it could be too late”.
Twitter's share price was down around two per cent at $16.92 shortly after 2pm in New York on Thursday. The company's share price was above $50 in April last year.