Twitter (NYSE:TWTR) recently announced it had acquired Dutch-based startup Revue, helping writers monetize their email newsletters. Although financial terms weren’t released, investors pushed Twitter stock higher on the news.
I haven’t covered Twitter’s stock in a long time. The last time I wrote about CEO Jack Dorsey’s other cash cow — Square (NYSE:SQ) being the first — was in November 2019, over 14 months ago.
At the time, I suggested that Twitter was the better buy, having lost 27% of its value over the past month.
“From a valuation perspective, there’s no question TWTR stock is cheaper than SQ. … Furthermore, if TWTR stock continue[s] to fall, potential acquirers could start to kick Twitter’s tires. Twitter might not be bought, but the interest in it should help boost Twitter stock,” I wrote on Nov. 18, 2019.
“At this point, Twitter stock appears to be the better buy for Jack Dorsey and for other investors.”
How does Twitter look 14 months later?
Twitter Stock Is Making Jack Dorsey Even Wealthier
In November 2019, TWTR was trading at $29. Thanks to a 60% gain in the past three months alone, it’s up 132% over those 14 months. Square is up 255% over the same period.
Dorsey’s CEO of both Twitter and Square. Their current market capitalizations are $47.6 billion and $108.4 billion, respectively.
As of Nov. 25, 2020, Dorsey’s most recent Form 4 said he owned 17.59 million Twitter shares. At current prices, that’s nearly $1.2 billion.
Dorsey’s most recent Square filing was Feb. 1. It says he owned 12.08 million shares of Class B stock, which come with 10 votes per share, and 38.26 million Class A shares that come with one vote. Assuming the conversion of the Class B shares on a one-for-one basis, his 50.34 million shares are worth $13.4 billion at current prices.
So, combined, his day jobs are worth $14.6 billion — and rising. The Bloomberg Billionaires Index says Dorsey’s net worth is $14.8 billion as of Feb. 11., putting him in at the 153 spot amongst billionaires.
Dorsey Should Step Down
Dorsey’s growing wealth isn’t too bad for a guy who continues to face flak from the media because he serves as CEO for both companies.
“He should be fired,” NYU business professor Scott Galloway said in November 2020. “I mean this is a big company with thousands of employees that plays a big role in the discourse of society, and about 1 p.m. every day he peaces out and he goes to another firm.”
Galloway believes that Dorsey is short-changing both organizations by working part-time for each of them rather than focusing all of his attention on just one.
On the other hand, I consider this to be indicative of what the function of a CEO should be at a large, publicly-traded company. It’s definitely not to micro-manage subordinates.
Why do you think so many CEOs of big companies are moving into the role of executive chairman? Amazon (NASDAQ:AMZN) CEO Jeff Bezos is a recent example.
“Non-executive chairman [means] they keep their nose in but their hands off of the business,” William Klepper, Academic Director of Columbia Business School’s executive education program told the Business Insider recently. “In this case, when you use the term executive chairman of the board, it basically means I’m not going to keep my hands off the business. . . So in many ways it’s a partnership now.”
Clearly, activist investors Elliott Management and Silver Lake Partners wouldn’t have allowed Dorsey to remain in his role if they felt he was hurting the day-to-day operations.
Frankly, I wouldn’t be surprised if the billionaire were to pull a Bezos with one or both of his babies, which should be okay with shareholders.
The Bottom Line
Since former President Donald Trump has no longer been president (Jan. 20), Twitter stock is up 32%, with almost all its gains secured over the past three months.
The former president put Twitter’s social media platform on the map — many would argue to the platform’s detriment — but now it must go back to being a place for information to be disseminated rationally and truthfully.
That’s why I see Revue’s acquisition as a reminder to investors that Twitter has always wanted to be a venue for writers and publishers.
“Our goal is to make it easy for them [writers and publishers] to connect with their subscribers, while also helping readers better discover writers and their content,” Product Lead Kayvon Beykpour and VP of Publisher Products Mike Park stated in a Twitter blog post discussing the deal.
Looking ahead, investors who own Twitter and Square for the long haul should expect to continue growing their wealth just as Dorsey has done.
If you can own both, do so. If not, my preference would be to hold Square. However, I’d consider it to be more of a 1 and 1A type of choice.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.
