Twitter's (NYSE:TWTR) stock took investors on a wild roller-coaster ride on Nov. 29 after CEO Jack Dorsey abruptly announced his resignation. Parag Agrawal, the company's chief technology officer, will succeed Dorsey. The social media company's stock initially soared by as much as 11% following Dorsey's announcement, but still ended the day down nearly 3%.

The bulls and bears seem fiercely divided about Dorsey's departure, and Twitter will likely remain a battleground stock for the foreseeable future. Let's take a look back at Dorsey's accomplishments at Twitter and his reasons for stepping down, and consider whether this leadership change will help or harm the company.

A person uses smartphone apps outside.

Image source: Getty Images.

Dorsey's history with Twitter

Jack Dorsey co-founded Twitter in 2006 and served as its CEO until he was ousted in 2008. Dorsey was reportedly dismissed due to concerns about his leadership abilities and his tendency to be distracted by outside hobbies. Dorsey co-founded Square (NYSE:SQ) the following year and remains the fintech company's CEO to this day. At Twitter, Dorsey was succeeded by the company's co-founder Evan Williams, who handed the reins over to his chief operating officer Dick Costolo in 2010 ahead of its initial public offering (IPO) in 2013.

However, Costolo struggled to grow Twitter's users and revenues after its public debut. In 2015, he stepped down, and Dorsey returned as Twitter's CEO but without giving up his CEO position at Square.

What did Dorsey change at Twitter?

When Dorsey took over, Twitter was struggling to grow its monthly active users (MAUs). At the time of its IPO, Costolo wanted Twitter to grow its MAUs from 185 million at the end of 2012 to 400 million by the end of 2013. However, it finished 2013 with just 241 million MAUs, and that figure rose to just 317 million by the end of 2015. After Dorsey returned, Twitter's MAUs only rose slightly, to 319 million in 2016 and 330 million in 2017.

At the end of fiscal 2018, Twitter stopped disclosing its MAUs and started reporting its monetizable daily active users (mDAUs) instead. The new figures exclude the fake, spam, and bot accounts which were inflating the number of MAUs. Twitter ended 2018 with 126 million mDAUs. That count rose to 152 million at the end of 2019, 192 million at the end of 2020, and 211 million in the third quarter of 2021. Twitter attributed that growth to its international expansion, its increased usage as a platform to discuss current events, and the rollout of new ad formats with more focused targeting methods.

Dorsey's focus on improving the engagement rates among a smaller audience of more active users -- instead of aggressively growing its MAUs -- stabilized Twitter's revenue growth over the past four years:

Growth (YOY)

FY 2017

FY 2018

FY 2019

FY 2020

9M 2021

Revenue

(3%)

25%

14%

7%

45%

Source: Twitter. YOY = Year-over-year.

Twitter's business remained resilient throughout the pandemic even as companies purchased fewer ads. It also set bold, three-year growth targets at its investor day in March, and declared it could grow its mDAUs to "at least" 315 million by the end of 2023 and more than double its annual revenues from $3.7 billion in 2020 to "over $7.5 billion" in 2023.

Twitter claimed that growth would be driven by new products. However, Twitter's latest product launches still feel like disorganized efforts to mimic other social networking platforms. These innovations include its short-lived "Fleets," organized "topics" for tweets, a new tipping feature, which now supports Bitcoin (CRYPTO:BTC), and subscriptions for top accounts.

So why is Dorsey stepping down?

That's why Dorsey's departure, which comes less than a year after Twitter set those ambitious growth targets for 2023, is a bit disconcerting. In a tweet, Dorsey said that Twitter's status as a founder-led company was not a strength but rather "severely limiting and a single point of failure." The company needed to "break away from its founding and founders" to grow. Twitter's board unanimously approved Parag Agrawal's promotion to the CEO position, which Dorsey praised, saying that Agrawal had previously "been behind every critical decision that helped turn this company around."

Dorsey didn't mention Square, but his departure from Twitter should give him more time to expand the growing fintech company. Dorsey owns more shares of Square than of Twitter, and the company has been aggressively expanding its ecosystem to keep pace with rivals like PayPal and Adyen. Dorsey is also leaving at a time when Twitter and other social networking platforms face tougher scrutiny over the limits of free speech, and the dissemination of hate speech and fake news stories.

The co-founder has often promoted Twitter as a platform for free speech, but Agrawal previously told MIT Technology Review that Twitter's role was "not to be bound by the First Amendment." That statement indicates Twitter might impose stricter censorship standards in the near future.

Should you still invest in Twitter?

Twitter's latest quarterly report disappointed investors because its expenses surged as it rolled out new products. I advised investors to stay away from Twitter after that post-earnings decline since its valuations still seemed too high and its goals too ambitious. Dorsey's departure raises new uncertainty for the business and its leadership, so for now, I still think it's best to wait to pick up new shares.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.