Twitter (TWTR) announced an intriguing integration with payments platform Square on Tuesday, enabling Twitter users to donate to political campaigns merely by tweeting. Taking the news at face value, that may just sound like good news for social media-conscious politicians.
Reading between the lines, however, it reads as if Twitter is ready to make Jack Dorsey the full-time CEO.
For those of you who don’t keep tabs on Facebook‘s (FB) unattractive cousin, TWTR stock has been languishing for the past year, with shares down a whopping 46% over that time.
Lackluster user growth, an inability to sufficiently monetize and outline a solid strategy have topped the company’s laundry list of problems.
In June, longtime CEO Dick Costolo stepped down, and co-founder Jack Dorsey took the position as interim Twitter CEO. Since then, TWTR stock has been rising and falling with the rumors of who will be the next chief executive.
Though subtle, I believe yesterday’s Twitter-Square integration is a firm hint that TWTR is ready to name Dorsey permanent CEO, despite its earlier stated reluctance to make Dorsey a CEO of two companies simultaneously at a time when Square is prepping to go public.
Here’s why savvy traders might want to bet on Twitter naming Dorsey CEO by the end of this month — and why that’s good for TWTR stock:
Leverage, Pressure and Other Clues
The CEO search has been going on all too long, and when you combine yesterday’s Twitter-Square integration — the first collaboration between the two companies — with tweets from one of Twitter’s seed investors, you can start to build a mosaic that points squarely at @jack being named full-time CEO of TWTR soon.
The seed investor in question is Chris Sacca, a former Google (GOOG, GOOGL) employee who broke into the Forbes “Midas List” of tech investors this year. He’s also a newly minted billionaire and an early investor in Uber, Stripe, and Instagram.
Last Friday, Sacca unleashed an exasperated tweet-storm, which began like this:
Headed into yet another weekend without a permanent Twitter CEO.
— Chris Sacca (@sacca) September 11, 2015
He then began pressuring the board, whom he criticizes as generally not having a large enough stake in TWTR stock, to act soon:
It’s time for the board to formalize the obvious. Make @jack CEO and let everyone get back to focusing on making Twitter better than ever.
— Chris Sacca (@sacca) September 11, 2015
Tech blog Re/code added to the conversation in a post today, which asserted that Jack Dorsey won’t be giving up his title as CEO of Square — and that it doesn’t really matter for his chances to become the permanent TWTR chief:
“…the leverage appears to now rest mostly with Dorsey, who is the top choice for the Twitter CEO job for several board members, according to sources.”
The article also notes that Twitter and Square headquarters sit just one block from one another on Market Street in San Fran.
The writing is on the wall folks! When early investors start talking about the timeline to name Dorsey the inevitable CEO, the time is nigh.
How does this play out for TWTR stock, though? Well, when the board finally does name a CEO, shares will almost certainly shoot higher. Alongside from Twitter’s business struggles, the leadership uncertainty has kept shares subdued.
In the longer term, Dorsey will have to come through with some solutions to Twitter’s user growth and engagement for TWTR stock to be deemed a solid investment. But with yesterday’s Square collaboration announcement, it looks like he’s already getting started.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
