Twitter Stock Isn’t Any More Compelling With a Permanent Jack Dorsey

So, let me make sure I have this right. Former Twitter (TWTR) CEO Dick Costolo resigned on June 11, starting the change that owners of Twitter stock had been clamoring for. The Board of Directors temporarily put Jack Dorsey — who helped co-found the company in 2006 and was then “removed” as head of the company in 2008 for several reasons — back at the helm of Twitter while they began the search for a permanent replacement for Costolo.

Twitter Stock Isn't Any More Compelling With a Permanent Jack Dorsey After nearly four months of looking (and presumably at least a few interviews) within a pool of at least several hundred truly qualified candidates, that same Board of Directors decides the guy currently sitting in the CEO’s chair is the right guy for the job after all?

Yeah, no wonder Twitter stock tanked to the tune of 8% on Thursday following the news. It’s tough to muster any confidence that the company is anything but a three-ring circus.

Jack Dorsey Still Not Official, But…

Just for the record, as of print-time for this commentary, Jack Dorsey still wasn’t officially (by the company) the new permanent CEO of Twitter. The source of news/rumor, though, was reasonably reliable.

That source was all-things-technology news website re/code, which simply attributed its reporter’s knowledge of the alleged hiring of Dorsey to “sources” in the commentary posted Wednesday afternoon.

That article has since been updated to clarify that the board has yet to make anything official and that there’s still a plan B. But at this point, Twitter’s board may as well go ahead and pull that trigger. By the time Wall Street’s and Main Street’s rumor mills got done processing the premise, shareholders of Twitter stock had little reason to believe Jack Dorsey’s hiring wasn’t a done deal.

And they’re clearly not happy about it.

Meet the New Boss, Same as the Old Boss?

One of the hottest points of contention Twitter stock owners have with Dorsey is the fact that — unless something’s changed in the past 24 hours — he’s also the co-founder and CEO of credit-card-acceptance technology company Square.

He’s not leaving that post … or at least so he said in June when he first took the helm at Twitter. His exact words? “As I said last week, I’m as committed as ever to Square and its continued success. I’m Square CEO and that won’t change.”

At the time, it was a problem for Twitter’s CEO search committee. The board’s exact words? The company is only interested in candidates “who are in a position to make a full-time commitment to Twitter.”

My how things change when desperation starts to swell.

Be that as it may, perhaps the bigger problem with Jack Dorsey as CEO of Twitter is also a more ubiquitous one: There’s a good chance he’s just not that great of a CEO, at least for TWTR.

His first go-around as chief executive of the microblogging company ended in a bit of a blaze of glory, and rumors of excessive partying, poor management skills, botched deals, and questionable hiring surfaced a little too often to not be plausible. In the meantime, though he’s largely credited with last quarter’s “success,” there’s little of that success he effected himself as CEO.

To his credit, he has grown up at least some since then. On the other hand, he was 30 during his first go around. How much more growing up is there to be done at that point?

And then of course there’s the nagging reality that Dorsey’s been helping to shape Twitter even after he lost the CEO job in 2008; he became the executive chairman when Dick Costolo became CEO in 2011. Though not directly behind the helm then, the company still struggled even with his arm’s-length oversight and advice.

Bottom Line for Twitter Stock

It would be nice to find some sort of silver lining in this strange and alarming story, but there isn’t one.

Yes, at least there’s some certainty for owners of Twitter stock who’ve been waiting for some sense of it since June. But, Twitter needs a full-time CEO. It still doesn’t have one.

And for the matter, the part-time CEO is a shaky one at best, whose best attribute is that he’s been around the company long enough to understand how it all works. What’s still completely unclear, though, is if Dorsey knows how to make more money for the company.

All that aside, perhaps the most alarming aspect of the completely unconfirmed permanent appointment is that he’s probably not the Board of Director’s first choice. The search committee spent almost four months explicitly looking for someone else despite having Dorsey right at their fingertips the entire time. It doesn’t send a message of confidence in the selection.

Fans and owners of Twitter stock will undoubtedly counter this bearish thesis by regurgitating some seemingly-savvy words from Lowercase Capital Chris Sacca, who essentially blamed the Board of Directors and a string of other managers for never making Twitter all it could be.

His comment, from the CNBC interview:

“This board has been a disaster from the beginning. If you look at history of the company looking all the way back, it’s the outside board members who fired both of the founders of this company. Those are the founders that took us from zero users to 200 million users in just a few years; since then we have seen professional managers come in and go sideways with this. And so yet again I’m not shocked, I’m upset as I have ever been, but I’m not shocked by this board continuing to screw it up.”

There are just two problems with Sacca’s conclusions. One: If the board has continually “screwed it up,” doesn’t it stand to reason that re-hiring Dorsey is just another error in their judgment? Two: If a string of professional managers has come and not made any kind of real growth dent, might that simply be a message that the product itself rather than the company’s management be flawed?

We’ll see.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.

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