MoffettNathanson, a boutique shop specializing in media and telecom, reiterated its sell ratings on Snap and Twitter shares, saying the market is overreacting to marginally better earnings reports from the two companies.
Snap's stock declined 6.1 percent Thursday, while Twitter shares dropped 3.8 percent.
"This past internet earnings season felt like an episode of the Twilight Zone or Black Mirror (for our younger readers); so unfathomable that it left us questioning our own reality," analyst Michael Nathanson wrote in a note to clients Thursday. "Snap and Twitter have likely run too much on already stretched multiples. As the market, fresh from all-time highs, recovers from a massive correction, we think the premium placed on owning strong businesses increases, while the risk of owning those with zero valuation support becomes even more pronounced."
Snap and Twitter shares are up 38 percent and 29 percent this month through Wednesday, respectively. Both companies reported better-than-expected fourth-quarter earnings results in early February.
Nathanson reaffirmed his $10 price target for Snap shares, representing 46 percent downside to Wednesday's close. He also reiterated his $19 price target for Twitter shares, representing 43 percent downside to Wednesday's close.
The analyst noted how Wall Street's 2018 consensus earnings per share estimates improved by 5 percent for Snap and rose by 19 percent for Twitter after their fourth-quarter earnings reports.
"Despite huge positive moves in Snap and Twitter … we find these names even more overvalued than before given that our estimates didn't change nearly as dramatically as the stocks moved," Nathanson wrote.
Snap and Twitter did not immediately respond to requests for comment.
— CNBC's Patricia Martell contributed to this report.
Disclosure: CNBC parent NBCUniversal is an investor in Snap.