Twitter (TWTR) shares are surging in trading Monday (March 2) on news change could be coming to the microblogging platform operator.
Citing people familiar with the matter Bloomberg reported Elliott Management, the activist investing firm, has amassed a “sizable” stake in Twitter and is gearing up to call for change including the potential ouster of Chief Executive Jack Dorsey.
Dorsey, who also runs digital payments company Square, has been facing criticism for weeks over his plans to spend half the year in Africa. Investors including Jeffrey Sonnenfeld from the Yale School of Management were less than impressed when Dorsey made the announcement. Sonnenfeld called it “reckless and egomaniacal" and said Twitter’s board was "irresponsible and negligent.”
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Sonnenfeld isn’t the only one who is upset. Elliott Management reportedly nominated four directors to Twitter’s board, even though there are only three seats that will be available. Bloomberg noted Elliott Management and executives at Twitter have had discussions, the latest Friday night, but Dorsey was notably absent. Those present included Chairman Omid Kordestani and its lead director Patrick Pichette, reported Bloomberg.
The potential shakeup at Twitter comes as the company is expected to benefit from the upcoming U.S. presidential election and the Summer Olympics. Those two events should drive usage and advertising sales growth. Twitter has decided to shun any political ads on its platform but it is still the place people come to discuss politics.
Twitter is an attractive target for activist investors because of its one class stock structure. Dorsey doesn’t have voting control of the company like Mark Zuckerberg of Facebook (META 0.84%) does. Investors seem to like the idea. Shares were recently up 7.4% or $2.47 to $35.69 a share.
