Shares of Twitter were trading more than 2.5% lower Monday in midday trade, as the company received a downgrade from Robert Peck of SunTrust Robinson Humphrey. He argued that user growth and engagement continue to be challenged by an increasingly competitive environment, and that the social media company isn’t likely to see a takeover this year. Peck maintained his price target of $18 for the stock.

Peck’s argument behind the downgrade includes Twitter’s struggle to monetize users and stimulate user growth, which has struggled to reach levels higher than 300 million. He doesn’t see much upside for the stock, but does see headwinds ahead that the company will need to deal with.

New products have yet to stimulate the user base growth that the company and analysts were hoping for, and there has been a lower engagement level from current users. Also, other apps like Facebook , Snapchat, and Instagram, among other apps, are helping to make the space more competitive.

Bottom Line

Twitter is currently a Zacks Rank #3 (Hold), and is down nearly 24% year-to-date. The company has struggled to grow its user base, while other apps like Instagram and Snapchat continue to grow and see success. The company is continuing to try and launch new features on its platform, but the results have for the most part been muted. As of now it seems like Twitter is yet to find the answer to its problems, but it will be interesting to see if and when the company can turn itself around.

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