Twitter’s CEO steps aside after a year of disappointing results, with co-founder and chairman Jack Dorsey taking over for the interim
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As one of the biggest start-ups in the last ten years, any development at Twitter is likely to make headlines. But news that Dick Costolo is set to step down as its CEO on July 1 has sent shockwaves through the tech community. Costolo will retain his position on the board of directors and Jack Dorsey, Twitter’s co-founder and chairman, will fill in as interim CEO while the board hunts for a replacement. And whilst the decision to step down is Costolo’s, it’s hard not to join the dots with the social media giant’s recent performance issues.
Twitter certainly hasn't been seeing the meteoric growth it once enjoyed. According to eMarketer, the research firm, its monthly active users will grow just 14.1% this year; a significant drop from the 30% growth rate it was seeing in 2013. And the same company estimates that Twitter’s global monthly active user rate will be just 6% by 2019. This coupled with its difficulties getting its teeth into the ad market – it has captured just 1.6% of US digital advertising compared to the 7.6% controlled by Facebook – goes some way toward explaining the recent perturbation of many Twitter shareholders.
The general feeling has been adroitly summed up in a lengthy blogpost by Chris Sacca, the high-profile Silicon Valley investor who was one of the platform’s earliest backers. “Twitter has failed to meet its own stated user growth expectations and has not been able to take advantage of the massive number of users who have signed up for accounts and then not come back,” he said. “Shortcomings in the direct response advertising category have resulted in the company coming in below the financial community’s quarterly estimates ... Consequently the stock is trading near a six-month low, well below its IPO closing day price, and the company is suffering through a seemingly endless negative press cycle.”
But, whilst doubts about Twitter's direction have had some negative effects on its share price in recent times, the market reacted well to the news of Costolo’s departure, with the company's stock leaping 8% in the hours after the announcement. And, needless to say, the company remains bullish about its future prospects: its projected revenue for the coming year is in the range of $470m to $485m, with its adjusted EBITDA estimated at between $97m and $102m.
In an official statement, Costolo said: “I am tremendously proud of the Twitter team and all that the team has accomplished together during my six years with the company. We have great leaders who work well together and a clear strategy that informs our objectives and priorities. There is no one better than Jack Dorsey to lead Twitter during this transition.”
Dorsey added: “The future belongs to Twitter thanks in large part to Dick Costolo’s dedication and vision. Dick has put a world‐class team in place and created a great foundation from which Twitter can continue to change the world and grow.”
And whilst it will be some time before a new CEO is found for the company, a few individuals have already thrown their hat into the ring:
It's safe to say we already know who our favourite is.