Twitter shares plummeted nearly 6 percent Monday to $29.27, the lowest level since the company's IPO in November 2013, and down nearly 60 percent since their January 2014 peak.
Sources say that executives internally, and investors, are frustrated with Noto for driving up expectations at Twitter's investor day last fall, and for driving them down last week when he said that achieving meaningful user growth would "take a considerable amount of time."
Now, investors and insiders are concerned that the company's valuation has been driven down so low, it's vulnerable to a buyout. The company's current market cap stands at around $19 billion.
That's less than the total $22 billion Facebook spent on WhatsApp, when that deal closed in October of last year.
In addition to the negative outlook, another factor weighing on results is the continuing exodus of employees. In the past week, three more product executives have departed, including Twitter's director of product management, Todd Jackson; its head of growth, Christian Oestlien; and product lead in charge of Twitter's apps, Trevor O'Brien.
And the pressure is on for Twitter to name a permanent CEO before its next earnings announcement in October. Interim CEO Jack Dorsey and revenue chief Adam Bain are still the two main contenders, sources tell CNBC. Now, the search committee is pressuring Dorsey to decide if he wants to be in the running for the role.
He has said he wants to continue in his role as CEO of Square. But Twitter executives have asserted the need for a full-time, dedicated CEO. So, either Dorsey would have to leave his top role at Square, or Twitter would have to restructure its leadership team so the board wouldn't mind if Dorsey also kept a role at Square.
Sources say Dorsey and Bain are such good complements, a number of investors and executives would like to have them both work together in permanent posts.
One source suggested that Bain could be promoted to COO and President and Chairman Evan Williams could take on a more active role.
Twitter did not comment.