Scott Kessler still can't find the value in Twitter.
The red-hot social media stock has shot up 40 percent since Dec. 11, making it one of the best-performing newly public stocks this year and granting it a larger market capitalization than most of the S&P index. But it all comes down to value and earnings for Kessler, an analyst at S&P Capital IQ.
Kessler has held a "sell" rating on Twitter since November and reiterated his recommendation Friday morning. His call contributed to a sharp 11 percent decline in the stock as of late Friday afternoon. (What are Twitter shares doing now? Click here)
"At the end of the day, we have thought and we continue to think the valuation is just initially stretched," Kessler said on "Squawk on the Street." "It's excessive. It appears now that we've approached some kind of mania. When that happens, you just kind of have to wait and see what happens."
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At its high from Thursday, Twitter held a much higher valuation than many believed because of its diluted outstanding shares, Kessler said. That puts the valuation well above the $38.5 market capitalization the company traded at Friday morning after dropping more than 6 percent from a day earlier.
"This is a stock that's trading at well over $50 billion without any earnings," Kessler said.
(Read more: Twitter continues surge, market cap tops $40 billion)
Despite his resolute "sell" rating, Kessler raised his 12-month price target for Twitter to $43 from $30. He contended that Twitter benefits from favorable supply-and-demand circumstances, but the end of 2013 could change that.
Investors might want to sell in the new year for capital gains purposes, and some might stop chasing performance in early 2014, he said.
"This is really one of those things—it's been frustrating," Kessler said. "It's been confounding."
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Investment bank Macquarie also downgraded Twitter's stock on Friday to "underperform" from "neutral," keeping its $46 price target.
"We continue to believe that Twitter as a company has a bright future and many opportunities ahead," the bank said in a note. "However, as a stock, we believe nothing has changed over the last 15 days to justify the rise in valuation."
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."