Social Media

This analyst's big sigh pretty much sums up Twitter's outlook on Wall Street

Why Twitter's narrative could get worse

When asked by CNBC about Twitter's outlook in 2017, RBC analyst Mark Mahaney sighed heavily — which says everything about Wall Street's take on the stock.

Twitter announced late Tuesday that chief technology officer Adam Messinger and vice president of product Josh McFarland would both leave the company, the latest in a string of at least 12 top staffers that have fled the company this year.

The departure of so many executives, particularly from the C-Suite, is "extremely unusual," Mahaney, RBC's managing director and internet analyst, told CNBC's "Fast Money: Halftime Report" on Wednesday.

"One of the challenges of Twitter, really from the beginning, is they've had so much volatility of their management team," Mahaney said. "At the end of the day you are betting on, or investing in, these individuals, and the individuals keep changing. So I think the narrative unfortunately gets worse."

Mahaney's not alone. Cantor Fitzgerald slashed Twitter's earnings per share estimates for the December quarter, while Mizuho called the C-Suite shake ups "significant investment risks."

Analysts surveyed by Factset expect Twitter to log $2.6 billion in total sales this year, and $2.8 million by the end of 2017. But Mahaney said a decline in revenue next year could be the "other shoe to drop" for Twitter.

"We think there's a decent chance that that happens, and that's still not reflected in the stock," Mahaney said. "That's why it's still a 'sell.'"

While Twitter has always had unique value, it remains on the radar as a takeover target if the share price declines in the next three or four years, Mahaney said. CNBC reached out to Twitter for comment.

"Getting advertisers to really engage there, given all the noise on that platform, that's been the real challenge," Mahaney said. "I think there's a traditional media buyer out there for this platform."

Twitter rival, Facebook, is among Mahaney's favorite stock picks for next year.

"WhatsApp, Facebook Messenger, each have a billion users and no revenue," Mahaney said. "You turn that revenue needle — — if you can do it, and I bet you they can — you do that, that's going to cause a change in the narrative and a re-rating of the stock."