Twitter shares spike amidst speculation of CEO’s departure
Twitter Inc.’s flagging stock saw a sharp rise yesterday after analysts predicted that CEO Dick Costolo’s reign at the company will soon come to an end.
Despite the popularity of the micro-blogging service, Twitter has been in rough shape over the last year, especially in the eyes of investors, who have watched as the price of Twitter’s stock has slowly fallen from its lofty $73.31 a year ago to as low as $30.50 last May.
In a recent note to investors, SunTrust analyst Robert Peck speculated that Costolo’s days at Twitter are numbered, and the prediction caused Twitter’s afternoon share price to shoot up 3.6 percent.
“We think there’s a good chance he’s not there in a year,” Peck told CNBC. But exactly how long Costolo will be with the company remains unclear, and Twitter has yet to confirm anything.
Last week, Costolo finalized the sale of millions of dollars worth of Twitter shares from his family trust, with the trust now no longer owning any stock in the company. An angered investor called for Costolo to be removed from his position, saying, “Selling stock speaks louder than any words.” The investor claimed that the CEO lost his employees’ respect by “grabbing a lifeboat” instead of putting his faith in the company.
Falling behind
Although Twitter still sees over 284 million users, the creation of new accounts has slowed dramatically over the last year. The company’s financials have also flagged, with only 4.8 percent quarter-to-quarter growth compared to the previous 6 percent.
Twitter was also recently passed by Instagram in its total number of users, even after Instagram purged several million spam accounts.
Some analysts point to Twitter’s internal restructuring for its poor performance, with new people in several high level positions such as a new CFO, a new COO, and a new VP of Engineering.
The restructuring and lack of growth has also affected employee morale, causing Twitter to fall off of Glassdoor.com’s list of the top 50 places to work. Glassdoor CEO Robert Hohman told Bloomberg that he believes “Twitter’s going through adolescence,” and it still has the opportunity to come out stronger after its growing pains.
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