3 Investors Weigh In on Jack Dorsey's Departure From Twitter

Jack Dorsey's recent departure as the CEO of Twitter (TWTR) came as a surprise to both investors and the public. What should investors think? In this segment of Backstage Pass, recorded on Nov. 29, Fool contributors Jason Hall, Rachel Warren, and Toby Bordelon share their individual takes. 

Jason Hall: Let's kick it off here. Let's go straight to hit the road Jack. I guess it started off as a rumor that Jack Dorsey was going to be stepping down as CEO, and then very quickly after that Twitter made the announcement that Jack is stepping down and it's effective immediately. The company's former chief technology officer will be replacing him as the CEO, and Dorsey is going to remain on the board until next May. I think at one point, I didn't see where it close guys, where did it close? Where did Twitter stock close?

Rachel Warren: It close down a little bit. I think about 3%, yeah, closed down about 3%.

Hall: Did it. Now it started off, it was up, like running up. Here we go. Check this out. I'm going to share this chart here, right at the bell in early trading. How does that make you feel Jack Dorsey? [laughs] A lot of people like this company is worth at least 10% more now [laughs] but yet closed down, finished the day down.

That happens. But we got a fun question here. First thing, we'll share our thoughts about it in regards to Twitter, thinking about that. Then Toby had a great question that I want us each to answer. Let's talk about our thoughts about this first and then I'll ask Toby's questions here. Rachel, what do you think?

Warren: I thought that this was interesting. I don't have a particularly vested interest in this move because I'm not a shareholder of Twitter and I have never thus far been particularly interested in being a shareholder of Twitter. I do think it's really interesting that you saw this huge spike in the stock earlier in the day. It seems like a lot of investors were excited on the news and then maybe came back down to earth.

Obviously, these day-to-day movements can be for a variety of reasons, but I think it would be most definitely connected with this news. I think it's not exactly a secret, Twitter and Jack Dorsey in particular has faced a lot of criticism over the last few years particularly with how the platform handles misinformation on its platform, potentially harmful rhetoric and content.

They're obviously not the only social media platform that's come under fire for that, but as the key platform that people all over the world use for everything from government pages, personal pages, people get their news off Twitter. I think they have a lot of responsibility there. I think this could be a good thing. I think it remains to be seen whether or not a change in leadership will actually effect changes on the platform level.

I know besides some of the handling of how they take posts down or whether or not they choose to take posts down the last couple of years. In addition, there has been some criticism I think, because they haven't had the same rate of growth from these other big social media titans like Facebook has had. I think the company's revenue was only up about 7% in 2020 compared to the previous year.

I think a couple of things that investors will probably be watching for is, is there going to be a change in policy as to how Twitter is handling some of these key issues that have been plaguing its platform over the last few years? Is there going to be decided change in how the company is approaching growing its top and bottom line?

I know the incoming CEO, he's been CTO since 2017. He's worked at Twitter for over a decade, and as the company's targeting to have 315 million monetize daily active users in just two years. Those are super aggressive goals so I think it will be very interesting to see if there's going to be a change in direction with this change on leadership.

Hall: Toby?

Toby Bordelon: Yeah. I think is probably good, too. Look, if you've been paying attention to Square and Twitter, recently, I think it's pretty obvious Dorsey has been much more focused on Square, on crypto, on payments that seems to be where his interests are. He hasn't been paying that much attention to Twitter.

Hall: Toby, I don't think that's fair.

Bordelon: Really? [laughs]

Hall: He use Twitter to publicize his-

Bordelon: He makes great use of Twitter to promote Square and crypto. It's true.

Hall: [laughs] It is true.

Bordelon: I feel like he's paying less attention to the business aspect on Twitter than he is using it like everyone else.

Hall: Right, no, he's a Twitter power user. He has no interest on other platforms.

Bordelon: He support his other interest. Sure he's on Twitter but [laughs] I think it's time for a change Jason, I really do. I think it's interesting they went with the Chief Technology Officer I think that should tell us something about where their focus is going to be going forward.

It's not that usual. Normally, you see like the CFO, the Chief Operating Officer if you're going to promote from within but here we've got the Chief Technology Officer.

I think I support the move. I used to be a Twitter shareholder then I wasn't, then I was using options, then I stopped doing that. I don't know. Maybe we'll see where they end up and I might go back to it at some point. This news by itself doesn't make me want to rush out and buy, I guess.

Hall: It's crazy. I go back a few years ago and Twitter was really struggling to grow users and engagement. There were a lot of questions about if they were ever going to figure out how to monetize the platform very well and he came back. The company, it didn't happen quickly, it took some time, made some changes, and things got better.

But I do agree, Toby, it seems like with Dorsey, he's one of those, like a squirrel guys where he loses focus on things. He moves on to other things that he thinks are of greater importance very quickly. When I say very quickly, I mean, in CEO years. For a business you want somebody who can run a company for 20 years and build a generational business.

Dorsey just doesn't seem to be that guy, or at least it doesn't seem that Twitter is the business that he wants to do that with. I think it makes sense. I think Twitter probably is going to be a healthier business with a CEO that can focus entirely on the business because I don't think Jack Dorsey is a visionary leader for Twitter now. That's the key. He's a visionary, he's not that for Twitter. Right?

Bordelon: Yeah. Do you remember the CEO of Twitter who was before he took over again?

Hall: No idea.

Bordelon: Remember the name?

Hall: Can't remember.

Bordelon: Dick Costolo, I believe, right?

Hall: That's right. Yeah.

Bordelon: Yeah. I haven't heard his name in a while. It's been interesting. Twitter's got an interesting history.

Hall: I forgot about that. Actually, it's funny because I didn't really start paying attention to Twitter again until Dorsey came back.

Warren: Interesting. [laughs]

Hall: It works, at least for this guy.