Twitter Inc (NYSE:TWTR) shares tanked as much as 6.10% to $64.84 in pre-market trading Monday after Morgan Stanley downgraded the stock from Equal-weight to Underweight. Morgan Stanley analysts Scott Devitt, Jordan Monahan, Erhan Soyer-Osman and John Egbert said in a research note to investors that Twitter Inc (NYSE:TWTR)’s success is far from guaranteed in the fiercely competitive market. Analysts said Facebook Inc (NASDAQ:FB) and Google Inc (NASDAQ:GOOG) are more likely to attract a large chunk of advertising revenue growth.

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Twitter may remain a niche product

Morgan Stanley’s bull case puts Twitter Inc (NYSE:TWTR)’s share price at $61. That’s based on a 24 times consensus revenue and 130 times consensus EBITDA for FY2015. Twitter Inc (NYSE:TWTR)’s ad products have yet to prove themselves. Analysts say that the microblogging company is a compelling social platform. But it’s far less mainstream than Facebook Inc (NASDAQ:FB), because the risk looms that it may remain a niche product.

Though it’s easy to sign up for Twitter Inc (NYSE:TWTR), users find it more complicated to understand how to get the most out of the site. In contrast, Facebook Inc (NASDAQ:FB) is a lot easier to use. A study by Pew Research Center found that only 22% of Facebook Inc (NASDAQ:FB) users have a Twitter Inc (NYSE:TWTR) account. But more than 90% of Twitter Inc. (NYSE:TWTR) users also actively use Facebook Inc (NASDAQ:FB).

Research firm IDC estimates that global online advertising revenue will jump to $167 billion by 2017. But a large part of that will go to giants, while smaller platforms will find it difficult to grow at the same rate that bulls expect. Social media advertising is likely to surpass $30 billion by 2017. Facebook Inc. (NASDAQ:FB) has already occupied about 65% of that market, while Twitter Inc. (NYSE:TWTR) has just a 6% share. Though Twitter Inc (NYSE:TWTR)’s share is likely to grow to 10%, while Facebook Inc. (NASDAQ:FB) will maintain its percentage share in 2017.

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Advertisers likely to prefer FB, YouTube over Twitter

Twitter Inc (NYSE:TWTR) bulls argue that the shift of TV ad dollars to online advertising will help the microblogging company’s Amplify TV product. However, Morgan Stanley thinks that advertisers are most likely to go to the biggest distribution platforms such as Facebook Inc. (NASDAQ:FB) and YouTube, and then to small platforms like Twitter Inc (NYSE:TWTR). So, it will have to compete with the juggernauts that already have extensive experience in integrating content with video ad products. Facebook Inc. (NASDAQ:FB) and YouTube are likely to attract larger brand ads, thanks to the size of their user base and reach.

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Twitter Inc (NYSE:TWTR) shares were last down 5.54% to $65.19 at 9:34 AM EST.