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Jack Dorsey of Twitter Buys Some Symbolic Twitter Shares As The CEO Search Continues

Written by on August 10, 2016

Jack Dorsey, co-founder and interim chief executive of always-in-turmoil Twitter, bought a trifling 31,000 shares of Twitter stock on Monday, pushing the Twitter stock price up by around 9% by spending roughly $875,000. The Twitter stock has been on something of a downwards spiral over the past few days and it has lost more than 15% over the last month (including today’s 9% gain).

Without today’s gain, Twitter stock would have been cumulatively down by nearly 25% in just the last one month. It’s clearly beneficial to Mr. Dorsey as the founder, interim CEO as well as a major shareholder to boost the stock prices thus. Here are the full list of stock purchases by Mr. Dorsey and other senior Twitter personnel.

Mr. Dorsey holds around 22 million Twitter shares and today’s purchase could be a scheduled buy as such stock purchases during crucial phases of a company’s life are subject to insider trading regulations. What such a purchase does is they may activate automated algorithms at high frequency trading firms which would place buy orders en masse on the news of purchase of stocks by Mr. Dorsey.

Interestingly, Mr. Dorsey has sold much more of Twitter stocks since November than he has bought. Overall, Mr. Dorsey has sold some 380,000 Twitter shares since November 2014 while he has bought less than 10% of that number. The other Twitter co-founder Ev Williams has also sold millions of shares during the last one year but he protests that these are automatic pre-set transactions.

The backstory to the stock purchase is the ongoing search for a full-time CEO for Twitter. Mr. Dorsey is a contender for the post but he wants to remain the CEO of Square, Inc., another company that he has founded. Meanwhile, Twitter’s board insists that Twitter needs a full-time CEO who doesn’t divide his time and attention between multiple companies.

Some, like influential early Twitter investor and angel investor Chris Sacca, are of the opinion that Twitter needs to hire Mr. Dorsey as the full-time CEO no matter what.

Mr. Dorsey tweeted:

With the Twitter stock down around 30% over the past one year, Twitter certainly needs someone to make that investment. Investors and analysts have questioned Twitter’s ‘plans’ to grow and whether it has any or not. Twitter’s leadership on their part have always insisted that the company’s advertising revenues are on a growth curve that they are comfortable with while in terms of introducing changes to the product, the former CEO Dick Costolo had reiterated that product developments are ongoing on a long-term basis.

Twitter is a loss-making company at the moment which is the greatest weakness of the company and what justifies people’s questions about Twitter. Twitter’s user growth too has stalled at 316 million monthly active users and investors have been disabused of their expectations (if they had such expectations) that Twitter will end up as another Facebook.

Chris Sacca Bats For Jack Dorsey

Mr. Sacca was exceptionally in the Dorsey camp as he tweeted his support for Dorsey’s cause:

Chris Sacca on Twitter CEO search

Chris Sacca on Twitter CEO search

Mr. Dorsey has been opaque about his future course of action having given noncommital answers to questions about his Square plans. Square, which is said to have confidentially filed for an IPO, is preparing for a scenario where Mr. Dorsey ditches his CEO position at Square to devote himself full-time to Twitter.

It won’t be unprecedented for one CEO to run two technology companies — Steve Jobs did it with Apple and Pixar for a while and Elon Musk is the CEO of both Tesla Motors and SpaceX.

Twitter Buy Out By Google?

It’s somewhat astonishing to think that Twitter’s stock price had risen to as high as $70 within two months of its IPO debut in November 2013. Currently, Twitter’s market capitalization is less than $20 billion and with Google having re-organized itself today, the speculation, which has always been there, that Google may purchase Twitter will surely return. Google has been a notable failure in the social media arena and most recently had to admit defeat with its Google Plus platform on which it decided to finally scale back. Twitter appears to be a nice fit for Google — something like YouTube which works independently as a division inside Google and Twitter could follow that model.

Will Google be willing to part with a significant share of the cash pile it sits on to make the largest purchase it has ever made and will Twitter’s board refuse an offer from Google if that offer values Twitter at $40 a share? Twitter’s drama is certainly a Twitter-worthy drama at any rate.