THIS is key for Twitter: Analyst

Twitter falling on earnings

Twitter has to do a better job of engaging its current users in addition to expanding its user base, Citi analyst Mark May said Wednesday.

"That's going to be key for the company to hit revenue forecasts next year," May said on CNBC's "Squawk on the Street."

"There's nowhere to hide. Users have been basically flat in the U.S. for about four quarters now."

Chris Ratcliffe | Bloomberg | Getty Images

May shared his thoughts after Twitter released second-quarter earnings and revenues that beat Wall Street estimates. The company's stock, however, traded sharply lower following the report's release as CFO Anthony Noto stated there will be a "considerable period of time" before Twitter sees sustained user growth.

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Nevertheless, May said Twitter has at least been able to monetize its existing user base.

"We think, in the U.S., their ad load and their monetization is approaching that of Facebook, which is clearly a much more mature business from an advertising standpoint," he said.

However, Robert W. Baird analyst Colin Sebastian said Twitter investors and management should not get their hopes up.

"One issue I had with the commentary from management last night, despite the fact that they did fess up to some of their headwinds, is that they still characterize the opportunity for Twitter to grow in the same light as Facebook. So investors are still being led down the path that one day Twitter can be as large as Facebook," Sebastian told CNBC's "Squawk Alley" on Wednesday.

Twitter's stock was sharply lower in afternoon trading.

DISCLOSURE: Citi owned at least 1 percent of Twitter's stock when this article was published.