Shares of Twitter surged nearly 9% Monday on reports activist hedge fund Elliott Management has acquired a $1-billion stake, or around 4%, of the social media giant and is pushing for change at the company, including the possible replacement of founder Jack Dorsey as CEO.
Elliott has nominated four directors to Twitter’s board in an attempt to fill three vacant seats at this year’s annual meeting, according to reports The New York-based fund’s chief Paul Singer is said to be having “constructive discussions” with the company.
Elliott is said to take issue with Dorsey’s perceived split loyalties as CEO of Twitter and another company he founded and runs called Square, which works in mobile payments. Dorsey raised red flags last December on Wall Street when he said he planned to spend half of 2020 working remotely in Africa as chief executive of both companies.
Wall Street thinks the pressure campaign raises the possibility of Twitter cutting costs or even being sold, although some defend Dorsey and note that the company posted its strongest user growth in some time last quarter. Morale is up and Twitter “is in a much better place today than when Dorsey returned as interim-CEO in 2015,” noted Richard Greenfield of LightShed Partners.
Dorsey, who dropped out of New York University in 1999, founded Twitter and sent the world’s first tweet in 2006. He was ousted by the board in 2008, then recalled as first interim and then permanent chief executive.
Those hoping to hear from Dorsey himself were disappointed when the executive canceled plans to speak at South by Southwest amid the ongoing outbreak of coronavirus. He was set to be a featured speaker. Twitter on Sunday banned all “non-critical travel business events,” joining an increasing roster of companies that are doing the same.
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