Please ensure Javascript is enabled for purposes of website accessibility

What You Need to Know About Twitter, Inc.'s Exec Change -- and Why It's Not Enough

By Daniel Sparks - Sep 3, 2015 at 3:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Twitter needs a fully committed CEO with a firm hand and a clear vision to reinvigorate user growth. Is Jack Dorsey the man for the job on a more than interim basis?

Twitter logo. Image source: Twitter.

A few Twitter (TWTR 1.65%) executives were shuffled around recently, Re/Code reports. While the changes could pan out to be beneficial for the company over the long haul, the move won't be sufficient to boost investor confidence in the near term. What Twitter really needs is a visionary, talented CEO -- a CEO like founder Jack Dorsey, who is currently serving in an interim CEO position for the company. But rearranging will have to do for now.

Here's an update on the executive changes, as well as a look at why they won't be enough.

The shuffle
"[P]roduct initiatives we've mentioned in previous earnings calls like Instant Timelines and logged out experiences have not yet had meaningful impact on growing our audience or participation," said Dorsey during the company's second-quarter earnings call, adding, "This is unacceptable and we're not happy about it." 

Given Dorsey's clear disappointment, a forthcoming executive change related to Twitter's product team was expected.

One of Dorsey's first public moves is this executive mix-up. Here's how the changes played out:

  • Twitter's head of developer products, Jeff Seibert, gets promoted to run the company's core consumer product.
  • Twitter's senior VP Kevin Weil will still oversee Twitter's consumer product, along with all of its products, but will be less involved in the day-to-day decisions involved with running the core consumer product.
  • Twitter's senior director of engineering, Rich Paret, will run developer products.

During the call, Dorsey said that despite his interim position, he would be very active in sorting out the company's problem and focusing the business on addressing its primary issue: slow user growth. By making some key executive changes, Dorsey showed that he is eager to follow through.

But Twitter's problem with user growth is bad enough that investors are going to want to see more than an executive rearrangement.

As a unique social media platform with a focus on sharing events and news, the hope has always been that Twitter could someday appeal to a wider audience. At the very least, investors expected more meaningful growth in the company's monthly active users for a few more years. But Q2's user figures suggested user growth could already be peaking. Excluding the benefit in Twitter's monthly active user account from SMS Fast Followers, its user base grew just 0.07% sequentially.

Twitter headquarters. Image source: Twitter.

As Dorsey pointed out, this sort of growth is unacceptable. The gravity of this underlying issue for Twitter's business needs substantial attention. It needs a fully committed CEO with a firm hand and a clear vision to reinvigorate user growth. It needs someone willing to shake things up.

Hopeful speculation
Could Dorsey become the next CEO? He's currently heading both soon-to-IPO Square and Twitter, so he has a lot on his plate. And Twitter has already expressed it will only hire a full-time CEO, so Dorsey would need to resign from his position at Square to take the CEO position at Twitter. But some founder zeal and commitment could be the only move right now that could revive confidence in the company's potential for a turnaround in user growth.

Perhaps this is too hopeful, but maybe the fact such key changes to Twitter's team are happening under Dorsey are a sign the founder is truly considering taking the job. Re/Code's Kurt Wagner even says, "people inside Twitter say he is definitely acting as though he's sticking around."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Twitter, Inc. Stock Quote
Twitter, Inc.
$40.17 (1.65%) $0.65

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.