Twitter stock: Is Twitter Inc’s Jack Dorsey the Next Steve Jobs?

TwitterCan Jack Dorsey Put a Bottom Underneath Twitter Stock?

Although many investors viewed Twitter, Inc. (NYSE:TWTR) as a lost cause, Jack Dorsey is bringing it back on course. Famous for co-founding Twitter, Dorsey returns at a time when TWTR stock is lagging far behind its social media peers. Can he do for Twitter what Steve Jobs did for Apple Inc. (NASDAQ:AAPL)?

It’s been a terrible 12 months for the microblogging platform. TWTR stock lost more than 40% in value during the last year, falling to roughly $29.50. By contrast, Facebook Inc. is up close to 29%.

The decline makes sense when you consider Twitter’s baseline numbers. Subscriber growth is slowing and ad revenue is stagnating, leaving many wondering what they saw in Twitter to begin with, not to mention the constant mismanagement.

Twitter is a cautionary tale of corporate clumsiness, a firm whose board of directors blunder from one crisis to another, blind to the damage they’re inflicting.

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The first big mistake was going public. Twitter enjoyed a bunch of privileges in private life that it simply can’t find in the public sphere of capital markets. That being said, Jack Dorsey’s appointment as permanent CEO looks like the start of a turnaround. He’s setting the stage for a series of reforms, beginning with a mass layoff of employees.

It’s time for streamlining. The move is eerily reminiscent of Steve Jobs’ return to Apple, when he slashed all non-core programs to reinstate focus in the organization.

Likewise, Dorsey is returning at a time when TWTR stock is floundering and the company lacks a cohesive strategy. His job is more about big-picture strategy and product development than the nitty-gritty of building Twitter’s platform. Sound familiar?

Jack Dorsey Returns to Save Twitter Stock

Of course, what’s done is done. Twitter will remain a publicly funded company and, I hope, recover its lost glory. In retrospect, the company’s initial public offering (IPO) went all too smoothly.

Dick Costolo, who served as CEO before Jack Dorsey, executed a smooth public offering. He sold TWTR stock to Wall Street with perfect fluency, earning him a spot on Time magazine’s “Top Ten influential Tech CEOs of 2013” list. (Source: “Where Did Dick Costolo Go Wrong?Fortune, June 12, 2015.)

But then everything went wrong. Markets lost faith in the company ahead of its first quarterly earnings report in January 2014. Product heads fled in droves, Costolo forced out co-founder Evan Williams, and the company was left without a vision.

Investors grew antsy about Twitter’s profitability, or more specifically, its lack thereof.

Jack Dorsey had to return. He had to save his firm, but there was a slight hiccup. While Dorsey was away from Twitter, he didn’t go sit on a beach and sip piña coladas. He built a new company, a payments company named Square, Inc.

The “return of the prodigal son” story arc in Twitter’s history is weirdly analogous to the Steve Jobs and Apple story. Both times, a visionary is brought back to save his troubled firm while he is running another company.

Jobs was running Pixar Animations when Apple came knocking on his door. When Dick Costolo stepped down, Dorsey replaced him as interim CEO because he was still running Square. TWTR stock jumped on the announcement but soon rebalanced as investors realized Dorsey is steering two firms.

Twitter’s board said they would continue to search for a permanent replacement. Unfortunately, that didn’t happen. We heard last week that Dorsey was confirmed as a permanent CEO, but he will continue to run Square, too.

Jack Dorsey Is the Savior Twitter Deserves

Putting aside the obvious complications of running two firms, let’s see what Dorsey is getting up to. He sent a company-wide e-mail on Tuesday, October 13 that gives us some indication of his thoughts: “We feel strongly that Engineering will move much faster with a smaller and nimbler team,” said Dorsey. “So we have made an extremely tough decision: we plan to part ways with up to 336 people from across the company.” (Source: “A more focused Twitter,” Securities and Exchange Commission, October 13, 2015.)

Ouch. The 336 layoffs represent approximately eight percent of Twitter’s workforce. I doubt that move will endear him to the company’s rank and file, but it shows a force of vision the company has sorely lacked.

As a show of good faith, Dorsey won’t take a direct salary. His earnings will come from his vast holdings of TWTR stock, giving him an added incentive to boost the firm’s credit on Wall Street.

In his letter, Dorsey added a simple justification for the job losses: “This isn’t easy,” he said. “But it is right.”

In my mind, Jack Dorsey has all the makings of another Steve Jobs, but hopefully he can skip some of the staggering narcissism.

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