After Twitter Inc. CEO Jack Dorsey confirmed his resignation from the company, investor groups and analysts said the leadership change is a net positive for the microblogging platform as it seeks to expand its user base and product offerings.
Dorsey resigned Nov. 29, confirming rumors that had been circling throughout the morning. Parag Agrawal, who has been with Twitter for more than a decade and has served as chief technology officer since 2017, was named Dorsey's successor as CEO and was appointed as a member of the board. salesforce.com inc. COO Bret Taylor was also named Twitter's new chairman of the board, replacing former Google LLC executive Patrick Pichette, who will still remain on the board.
The former CEO said in his goodbye letter that running a founder-led company is "severely limiting" and that he's made long-term efforts to ensure other leaders take the reins of the social media platform.
The move comes a little more than 18 months after Elliott Management Corp. founder Paul Singer encouraged Dorsey in 2020 to step down from at least one of his roles as heads of both Twitter and digital payments company Square Inc. Elliott is the 13th largest stakeholder in Twitter, holding 10 million shares of common stock, according to data from S&P Global Market Intelligence.
"Having gotten to know both incoming Chairman Bret Taylor and incoming CEO Parag Agrawal, we are confident that they are the right leaders for Twitter at this pivotal moment for the company," Elliott Managing Partner Jesse Cohn and Senior Portfolio Manager Marc Steinberg said in a prepared statement to Market Intelligence.
In his new leadership role, Agrawal will have to contend with both regulatory risks and efforts to impress Wall Street as the platform struggles to capture more U.S. users, all while rearranging its product lineup to focus more on live conversations and not just microblogging.
The company has made controversial decisions that turned heads in Washington, such as banning political ads in 2019. It also permanently banned former U.S. President Donald Trump's Twitter account in January following the attack on the U.S. Capitol building.
"Twitter's platform is so important and relevant to our public conversation that it requires the full attention of the CEO," Natasha Lamb, managing partner at activist investment firm Arjuna Capital, said in an interview.
Lamb added that the company's new leadership may help reinvigorate its stock, which has been struggling to make gains in 2021, as it rolled out features like Spaces, a live audio conversation companion tool.
Shares in Twitter spiked above $52 per share Nov. 29 as rumors first circulated about Dorsey's departure, but the stock has since settled back below $44 as of late afternoon trading on Nov. 30.
Still, a stronger stock valuation does not necessarily dictate how happy users and investors may be in the platform under its new leadership, CFRA Research analyst Angelo Zino said in an interview, adding that the company's biggest challenge has been increasing engagement.
"Overall, investors should look at this favorably," said Zino, though some of the company's long-term financial goals, such as doubling its revenue from 2020 levels, may be too ambitious. "Having a new CEO at the helm allows them to temper down some of those expectations, if needed."
Jefferies analyst Brent Thill said in a Nov. 30 note that user growth will also remain a challenge. Twitter will have to work to increase its historically flat U.S. monthly daily active users.