Shares of Twitter, Inc. (TWTR) dropped 2.74% on November 29 to close at $45.78 after the social media giant announced that its CEO, Jack Dorsey, is stepping down. Dorsey will be replaced by the current Chief Technology Officer (CTO) Parag Agrawal, effective immediately.
Dorsey, who was serving as both the CEO of Twitter and Square (SQ), will continue to be a member of the Board till his term expires in 2022.
Dorsey commented, “I’ve decided to leave Twitter because I believe the company is ready to move on from its founders. My trust in Parag as Twitter’s CEO is deep. His work over the past 10 years has been transformational. I’m deeply grateful for his skill, heart, and soul. It’s his time to lead.”
Furthermore, the company announced that Bret Taylor will take over as the Independent Chairman of the Board, effective immediately. Bret Taylor has been a member of Twitter’s Board since 2016. Taylor will replace Patrick Pichette, who will remain on the Board as chairman of the Audit Committee.
Parag Agrawal, From CTO to CEO
Parag has been part of Twitter for over a decade since 2011, and was appointed as the CTO in October 2017. He has been in charge of the company’s technical strategy, and has enhanced machine learning across the company. Parag holds a Ph.D. in Computer Science from Stanford University and a Bachelor’s Degree from the Indian Institute of Technology, Bombay.
Management Weighs In
The new Independent Chairman of the Board, Bret Taylor, stated, “On behalf of the Board, I want to thank Jack for his visionary leadership and an unrelenting dedication to Twitter since its founding. Jack returned to Twitter and turned the Company around at the most critical time. The progress since then has been nothing short of incredible. Jack has given the world something invaluable and we will continue to carry it forward.”
He further added, “Parag understands Twitter and appreciates the Company’s unique potential. He has been instrumental in tackling our most important priorities, including accelerating our development velocity, and I know he’ll hit the ground running to strengthen execution and deliver results.”
Wall Street’s Take
Following the news, Piper Sandler analyst Thomas Champion reiterated a Hold rating on the stock with the price target of $70 (52.9% upside potential).
Champion views the CEO change as “modest positive” and “not a complete surprise.” Although lesser-known, the analyst said that CTO Parag Agarwal has been key to improved product velocity at the company recently. He believes will Agarwal be the right fit for the role of CEO and Twitter should benefit from his leadership as a full-time CEO.
Overall, the stock has a Hold consensus rating based on 4 Buys, 14 Holds, and 2 Sells. The average Twitter price target of $70.83 implies 54.7% upside potential to current levels.