Jack Dorsey, the Twitter co-founder, stepped down yesterday from his role as CEO of the company. The incoming replacement will be the current Chief Technical Officer, Parag Agrawal, who becomes the youngest CEO in the S&P 500. Dorsey is also the CEO of the payments firm, Square, and has been criticized in the past for spreading his focus across the two public companies. Shareholders have also expressed unsatisfaction with the stock performance. Despite a surge in price at the start of 2021, Twitter stock is now down 20% year-to-date.
Twitter has been in the spotlight due to the growing political discussions around the role the social media platform plays in distributing information and misinformation. Greater involvement or regulation from governments will weigh on the company’s independence and ability to execute their commercial strategy. Technology-wise, the company has also struggled to introduce new functionality or expand their business across new product verticals in a way that other tech firms such as Facebook/Meta have done.
There are mixed opinions on Twitter from the investment community and on Wall Street. A Bloomberg survey of Equity Research Analysts currently indicates that 61% have a “HOLD” recommendation on Twitter stock, whilst 26% are “BUY”, and 13% are “SELL”.
Whilst it is too early to make any predictions, there will be significant pressure for Agrawal to hit the ground running whilst facing a challenging competitive and political environment. We recommend observing this stock from the side-lines in the short-term.
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