“I love twitter” was Jack Dorsey’s last tweet as Chief Executive Officer of the social media firm, Twitter (TWTR).
After a six-year stint, and a total of 16 years, the co-founder announced in a letter to Twitter’s employees that he was stepping down again from his role at the helm of the company. He will be replaced by Chief Technology Officer and long-time friend of Dorsey’s, Parag Agrawal. Following his departure, Dorsey will remain on the board of directors until his term ends in May 2022.
The technology entrepreneur had been running not just the $37-billion market cap social networking company, but also financial services and payment firm Square (SQ). As CEO of both publicly traded companies, many investors and employees did ring concern at Dorsey’s time allocation, noting that the head of Twitter should at least devote a full-time jobs’ worth of effort in running it.
Dorsey’s stronger focus on Square and his other projects is blamed for the lack of innovation and value over at TWTR, which has risen only about 12% from its IPO price nearly eight years ago. This metric shows a considerable lagging in relation to its peers. For instance, Meta Platforms (FB) is up about 786% since it went public a little over nine years ago.
Meanwhile, the company has not been without its controversies. Prior to and during the Trump presidency, Twitter was used as an important tool for the former Commander in Chief to reach his audiences and to a larger extent, the whole world. After the January 6 capital riot, Twitter removed Trump’s highly active account, spurring discussions on the freedom of speech.
Furthermore, the company has faced pressure from U.S. lawmakers on curbing hate speech disseminated across its platform, as well as the spread of misinformation for which other social media firms have been blamed.
Edged on to step down in 2020, stakeholder Elliott Management and billionaire co-CEO Paul Singer did not see Dorsey’s dual-tenures as a sustainable situation. The activist hedge fund, known for buying floundering companies and building them back up to profitability, took this on as one of its initiatives to benefit the company.
At the time, Dorsey refused to capitulate, instead compromising with Elliott Management’s request on fund allocation for share repurchases and appointing two board members.
While this did appease investors for some time, the stock has since languished.
On TipRanks, TWTR has an analyst rating consensus of Hold, based on four Buy, 14 Hold, and two Sell ratings. The average Twitter price target is $70.83, representing a potential 12-month upside of 52.6%.
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