The outlook for Twitter (NYSE:TWTR) stock over the next two years is "binary," according to MKM Partners' analyst Rob Sanderson (via Barron's).

"User-experience success or failure could make Twitter a $100 or $10 stock," Sanderson said in a note to investors this month.

Sanderson's view for Twitter is worth mulling over. With the recent return of co-founder Jack Dorsey as CEO, the company really is in an uncertain position. On one hand, Dorsey's willingness to make big moves to enhance the company's product in a way that the user-experience appeals to the masses is encouraging. But, on the other hand, there's a chance that these efforts won't go as smoothly as expected, leaving Twitter shareholders with a niche social platform.

Twitter headquarters: Source: Twitter, photo by Aaron Durand (@everydaydude).

Behind Sanderson's neutral rating for Twitter stock
"We continue to believe that Twitter has a strong and unique content story with mass-market applicability," said Sanderson, who pegs Twitter stock's fair value today at $29 and rates the stock "neutral." Indeed, if Dorsey can truly help Twitter appeal to a larger audience, Sanderson believes the potential for Twitter stock is huge: "We think that simplifying the user experience could open the mass market for Twitter, double its market cap and put the company in position to double again."

The analyst, however, has concerns about the platform's recent execution: "A difficult user experience, high attrition and declining engagement continue to be challenges."

A confusing user experience is a key reason for Twitter's slowing user growth, the analyst believes. Of course, this isn't news. Even Twitter management acknowledges this; Dorsey has iterated on a number of occasions since he returned as CEO that the company needs to simplify its user experience and communicate its value better to users.

"Our Q2 results show good progress in monetization, but we are not satisfied with our growth in audience," said Dorsey in the company's second-quarter earnings press release, shortly after he was named interim CEO and before he took the reigns as permanent CEO. "In order to realize Twitter's full potential, we must improve in three key areas: ensure more disciplined execution, simplify our service to deliver Twitter's value faster, and better communicate that value."

Believing such extreme outcomes in both directions are possible, the analyst's neutral rating for the stock makes sense.

Twitter's user growth problem
But is there really merit to Sanderson's issue with the company's recent user growth problems?

To illustrate just how poor Twitter's growth in monthly active users (MAUs) has been, compare Twitter's sequential growth in MAUs during the last two quarters to Facebook's (NASDAQ:FB).

Company

Q3 MAUs

Q2 Sequential MAU Growth

Q3 Sequential MAU Growth

Twitter

320 million

3%

1%

Facebook 

1,545 million

3%

2%

MAU stands for monthly active users. Data for table retrieved from respective quarterly SEC filings. Table source: Author.

Facebook's combined sequential growth for the previous two quarters is ahead of Twitter's. Sure, Zuckerberg's empire may only be growing a hair faster than Twitter is, but this is impressive considering how much bigger Facebook is than Twitter. Even more, Twitter's sequential growth is overstated for these two quarters, as the company is including the benefit of its SMS Fast Followers, or Twitter users who access the platform primarily on feature phones through SMS and are very low value to the company's business.

And Facebook's ability to grow other platforms other than its original, native social network adds to the uncertainty surrounding Twitter's user-growth potential. Facebook's WhatsApp, Instagram, and Messenger are all growing much faster than Twitter. Watching Facebook easily grow a handful of platforms so rapidly, some investors may wonder whether Twitter's market is fundamentally limited by a niche appeal -- even if Dorsey tries to make its product more appealing.

Given how slow Twitter's user growth is so early in the company's plan to appeal to the mass market, it's not yet clear that Twitter can attract as many people as Dorsey hopes. While Dorsey is a talented and proven leader, his vision for greater adoption still represents speculation.

What should investors do? Despite two opposing potential outcomes, the upside potential for Twitter's platform if the company can successfully attract the masses makes the stock at least worth holding onto if investors already own it.

Daniel Sparks has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Facebook and Twitter. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.