Analyst Youssef Squali wrote, "Similar to 4Q13, both MAUs and engagement (two critical drivers of long-term growth) came in weaker than expected."
Shares of the social network are tumbling on Wednesday, even as the company beat earnings and revenue estimates. Over the three months to March, the company broke even, beating estimates by 3 cents a share, while revenue climbed 119% year over year to $250.5 million.
"Our new $40 PT is derived using DCF analysis, and reflects the lower-than-expected MAU/engagement growth, partially offset by better monetization," Squali wrote in the report.
By market open, shares had dropped 11.9% to $37.53.