Shares of Twitter (NYSE:TWTR) were halted this morning after it was announced that CEO Jack Dorsey would be stepping down. TWTR stock rose as high as 10% during the pre-market session before opening lower and then subsequently being halted. As of 10:56 a.m. Eastern, the stock resumed normal trading.
What Happened With TWTR Stock
Shareholders of TWTR stock should welcome this big news. Twitter shares have risen by 85% since Dorsey became CEO of Twitter in October 2015, trailing the S&P 500’s return of 127% during the same period. While the exact motive for Dorsey’s departure is unknown, many have speculated that Dorsey will spend more time focusing on Square (NYSE:SQ), of which he is also the CEO. Shares of the payment processor stock rose 4% during the pre-market session, but have since given back all those gains.
Many shareholders are unhappy with Twitter’s performance over the past few years. The rollout of subscription-based Twitter Blue this year received a lackluster response, as it came with features that many users thought should be free. These features included organized bookmark folders, a reader for long Twitter threads, and an Undo Tweet button. Last year, Twitter also rolled out a Fleets feature, which it removed after a few months due to lack of use.
Retail shareholders aren’t the only party unhappy with Twitter and Dorsey. Last year, famed activist investor Elliott Management launched a campaign to replace Dorsey as CEO. At the time, Elliott owned a 9% stake in Twitter and was concerned that Dorsey was planning a temporary move to Africa. Elliott theorized that Dorsey couldn’t manage two billion-dollar companies while out of the country. The feud was eventually solved after Dorsey cancelled his Africa plans and granted Elliott a seat on Twitter’s Board of Directors. Dorsey also announced plans to fund a $2 billion share repurchase program.
What’s Next For Twitter?
Per CNBC, Twitter’s current CTO, Parag Agrawal, will replace Dorsey as the CEO. An alumnus of IIT Bombay and Stanford University, Agrawal has worked for Twitter for more than a decade and took over as CTO in 2017. Dorsey had some words of encouragement for the upcoming Twitter CEO:
“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.”
Dorsey will stay on Twitter’s board until the company’s 2022 stockholders meeting. While this is an end of an era for Dorsey’s Twitter, shareholders are looking forward to major changes for the social media network.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
