Facebook now looks more like "Spambook," and its advertising looks less promising than investors originally thought, said Richard Greenfield, media and entertainment analyst at BTIG Partners. Greenfield's firm has a "sell" rating on Facebook with a $22 price target.
Even with the stock trading around Greenfield's price target, he still sees "decent downside" and added that he thinks "Facebook continuing to go down certainly creates a lot of value for investors to continue to short this stock."
Greenfield sees two main problems with Facebook. First, he said that the street's 2014 expectations are "very robust," and he expects that key metrics such as mobile advertising will disappoint the Street in the near term. Second, he questions the viability of social advertising itself.
"I think social advertising is really, really challenging," he told CNBC's "Squawk on the Street" on Tuesday. "The overarching point is people thought that going into the IPO, Facebook's data was better. Because of their ability to target on social that they'd be able to outperform on advertising."
He said that users are increasingly seeing "suggested posts," which are targeted more on basic demographics and web activity than social activity related to your friends. "That's just what Yahoo does. That's just what AOL does. What makes Facebook special was supposed to be the data on social. Instead, they're reverting back to what all of the other websites do."
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"It just makes Facebook a lot less special and it probably deserves a lot less of a premium multiple, because that data just isn't as good as you thought it was," he said. "It's looking less and less like Facebook and more and more like 'Spambook.' You're seeing ads that just don't seem terribly relevant to the target audience."
"These 'suggested' posts are just direct marketing, that's really what it is," he said.