One of the more surprising pieces of news that emerged over the weekend was a report that one of Silicon Valley’s best-known CEO’s could be under threat of losing his job. Elliott Management, one of the best-known activist hedge funds in the country, has nominated four new directors to the board of Twitter (NASDAQ:TWTR), a move that could lead to an effort to get CEO and Twitter Jack Dorsey kicked from his position.
Elliott has invested over $1 billion into the social media giant, buying a significant enough stake that it can influence the appointment of new directors. The activist hedge fund has also stated before that it would like to appoint a new CEO to Twitter and replace Jack Dorsey, who became CEO of the company for the second time in 2015.
Although Dorsey has long been associated with Twitter, many investors have become frustrated by the CEO’s antics. Among other things, Dorsey announced back in November that he intended to spend between 3 to 6 months living in Africa in 2020, a move that angered many shareholders who weren’t satisfied with the company’s performance so far. It’s these frustrations that have made Elliott’s plan to potentially oust Dorsey all the more likely.
Another major issue for Twitter has been ongoing technical issues, which ave hurt the company’s ability to sell ads. That’s exactly what happened last year, with Twitter seeing a significant decline in its stock after announcing technical problems in its third quarter. Some investors might remember that Dorsey was initially pushed out of his CEO role at the company back in 2008 for a similar issue. Ongoing technical problems have been a recurring issue under his leadership, and investors are largely disappointed in Twitter’s lack of growth. Despite its popularity, the company remains only a fraction of the size of rival social media giants, reporting only modest annual growth rates.
Twitter recently reported its fourth-quarter 2019 financial results. While revenue had grown to record highs, rising costs have continued to be a problem for the social media giant. In response, the company said it would be increasing its staff by around 20% in order to better tackle its technical problems.
“Entering 2020, we are building on our momentum — learning faster, prioritizing better, shipping more and hiring remarkable talent. All of which put us in a stronger position as we address the challenges and opportunities ahead,” said Jack Dorsey earlier in February after announcing the quarter’s results.
Time will tell whether Dorsey will manage to keep his position or if he will get ousted once again. The way things are going right now, it seems likely that he could be pushed out of his role for the second time.
Twitter Company Profile
Twitter is an open distribution platform for and a conversational platform around short-form text (a maximum of 140 characters), image, and video content. Its users can create different social networks based on their interests, thereby creating an interest graph. Many prominent celebrities and public figures have Twitter accounts. Twitter generates revenue from advertising (90%) and licensing the user data that it compiles (10%). – Warrior Trading News