Twitter, Inc. (NYSE: TWTR) is lower in pre-open trade Thursday (-2.8%) following a scathing report from Morgan Stanley analyst Brian Nowak on prospects for the social network. Nowak cut his price target on the Underweight-rated stock to $16 (from $18) and set a bear case price target of $8. The report comes as Twitter engagement and user trends show continued declines.

Nowak said engagement and new user trends remain "troubling."

"We believe TWTR's core user engagement remains in decline, as time spent per U.S. mobile user fell by an estimated 10% YoY in 1Q:16," he said. "This may be an improvement from the 30%+ YoY declines from last year, but stepping back, TWTR's time spent per user is already among the lowest in the social group."

New user growth doesn't appear to be rebounding either, as quarter-over-quarter new mobile app downloads were flat for the second straight quarter.

"Getting a precise read into quarterly monthly active user (MAU) trends is difficult, but these data make us incrementally cautious considering 1Q is typically a strong seasonal MAU quarter for TWTR (benefiting from new holiday smartphone app installs in the new year)," he comments. "For frame of reference, last year this metric was up 5% sequentially. Given these trends, we are reducing our forward MAU estimates" The firm is now assuming that TWTR adds 2.6mn/0.3mn global monthly users in 2016/2017, vs. 5.2mn/3.4mn previously.

Nowak said he sees fewer users and less time per user holding back TWTR's platform monetization. As a result, they are reducing our 2016/2017 advertising revenue estimates by 5%/7%. They now see 13%/25% risk to 2017 Street revenue/non-GAAP EBITDA.

The $8 bear case would come into play if ad impression, MAU growth, pricing, and advertiser demand are weaker than expected as Twitter struggles to compete for internet users’ time and advertisers' incremental budgets. The would mean mobile MAUs are roughly flat from '16 to '19.

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Shares of Twitter, Inc. closed at $17.26 yesterday.