"We downgraded the stock to a hold last night," said Mahaney, RBC Capital Markets' lead internet analyst. "We've had a buy on it since $24. We've had the wrong call on the stock."
"This company showed less visibility into its revenue than we thought was possible," Mahaney told "Squawk Box." "Halfway through the quarter last quarter ... they said they could grow revenue $60 million sequentially from the June quarter, September quarter. They came in about a third lower than that."
Mahaney also said the company's daily average users came in "light," and he said the report lacked any positive engagement metrics. "It was kind of three strikes for us," Mahaney said.
Shares of the parent company behind Snapchat sank as much as 20 percent in after-hours trading following its quarterly earnings report. The stock later pared losses, to trade about 11 percent lower premarket Wednesday, after Chinese internet giant Tencent said has taken a roughly 10 percent stake in the company.
Mahaney says Tencent probably chose "the least worst asset" with Snap instead of going with a company like Twitter. "There's no question this asset has strategic value. It has a very strong lock on millennials," he said.
Also on "Squawk Box," analyst James Cakmak, who is neutral on the Snap stock, said a lot the problems the company has seen are "self-inflicted."
"You're a company with 178 million engaged users. If you're not extracting the value from them, by definition, that's your fault," said Cakmak, tech analyst at Monness, Crespi, Hardt.
Disclosure: CNBC parent NBCUniversal is an investor in Snap.