Twitter, Inc. (NYSE:TWTR) stock surges as activist investor seeks to oust CEO Jack Dorsey
Twitter Inc. shares rose Monday after Bloomberg reported that an activist investor has built a sizable stake in the social media company and is pushing for changes, including possibly replacing co-founder and Chief Executive Jack Dorsey.
The stock climbed 7.9% to $35.82 a share. It had gained only 3.6% this year through Friday before news of the activist investor emerged.
When Twitter executives met their activist investor agitators from Elliott Management Corp. for the first time last week, the man with the most to lose was absent. Dorsey didn’t attend the Friday night summit in San Francisco, where his future was the main topic of conversation, according to people familiar with the matter.
Instead, Twitter’s representatives included Chairman Omid Kordestani and lead director Patrick Pichette, said the people, who asked not to be identified because the details weren’t public. In Elliott Management’s corner was the New York-based hedge fund’s head of U.S. activism, Jesse Cohn, and portfolio manager Marc Steinberg, they said.
Chief among Elliott Management’s concerns: The need for Twitter to have a full-time CEO, rather than one who splits his time, as Dorsey does, between the social media company and mobile-payments platform Square Inc. In a year in which major news events are colliding — the spread of the coronavirus, the U.S. presidential election, the Summer Olympics — Elliott Management thinks Twitter needs the undivided attention of a CEO to oversee the role it plays in disseminating information, especially when new users and advertisers are flocking to the platform, the people said.
The meeting — the first face-to-face talks between San Francisco-based Twitter’s board and the activist since Elliott Management raised its concerns — was productive and expected to lead to further conversations, they said. The hedge fund, which was founded by billionaire Paul Singer in 1977 and manages about $40 billion of assets, has taken a stake of more than $1 billion in Twitter and nominated four directors, including Cohn, people familiar with the details said.
Twitter has a staggered board, which means only three of its directors will stand for election at the 2020 annual meeting, which has yet to be scheduled but last year took place in May. Elliott Management has nominated an extra director in case there are additional vacancies, the people said. Dorsey has a seat on the board.
Elliott Management is concerned that Dorsey’s other interests — in addition to his time at Square, the CEO has also floated the idea of spending as much as six months this year working in Africa — have taken his attention off Twitter and led to the company becoming significantly undervalued. Insiders say some things move at a slower pace at Twitter than at its social media rivals.
The company, co-founded by Dorsey in 2006, has moved sluggishly when it comes to launching new products, with consistent turnover within its product organization plaguing innovation for years. Although the process reflects Dorsey’s thoughtfulness, and his willingness to examine a product from all sides, it can come at the cost of moving too slowly for a consumer internet company in a crowded and competitive industry.
One example, reported by Recode in 2017, saw a significant delay in Twitter expanding the length of tweets from 140 characters to 280 characters. At one point, the company even considered a 10,000-character limit. It eventually settled on doubling the length of tweets, but only after years of discussion and a near-finished version that was never released.
How Dorsey manages his time has come under scrutiny. The CEO typically spends his mornings at Twitter and then his afternoons at Square, which has offices just a block away on San Francisco’s busy Market Street. Dorsey, who has said he sleeps 8½ hours a night, has held both jobs since he returned to Twitter as CEO in 2015 after a break from the role. His teams are used to coordinating with each other, the people said, but it can still take away from his ability to commit to either company in the way a full-time CEO might.
Dorsey also traveled a lot last year, with Twitter finance chief Ned Segal telling Bloomerg TV this month that the CEO had visited about 30 countries. The 43-year-old billionaire Dorsey has been a strong proponent of remote work, encouraging Twitter employees to follow suit when necessary.
They’ll be needing those skills more than ever this week: Twitter joined many companies in announcing Sunday that it’s suspending all “non-critical business travel and events” to help protect staff from the new coronavirus. It followed up Monday by encouraging its employees to work from home if possible.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 39.09.
The projected lower bound is: 32.75.
The projected closing price is: 35.92.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 4 rising windows in the last 50 candles–this makes the current rising window even more bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 39.4324. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 52.43. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 15 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -15. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.
Rex Takasugi – TD Profile
TWITTER INC closed up 2.620 at 35.820. Volume was 134% above average (neutral) and Bollinger Bands were 21% wider than normal.
Open High Low Close Volume___
36.000 36.860 35.140 35.820 9,029,407
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 36.19 34.10 36.34
Volatility: 73 57 53
Volume: 5,360,749 4,064,851 3,156,576
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
TWITTER INC gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
TWITTER INC is currently 1.4% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of TWTR.N at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on TWTR.N and have had this outlook for the last 1 periods.
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