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Jack Dorsey Buys $9.5 Million in Twitter Stock

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CEO spends $9.5 million

Jack Dorsey, who is the CEO of both Twitter (TWTR) and digital payment company Square (SQ), recently disclosed that he purchased 574,002 shares of Twitter. Dorsey paid $9.5 million of his own cash for the stock purchase. 

So far in 2017, Dorsey has bought 1.0 million Twitter shares and spent ~$16.5 million on the purchases. With the latest stock purchase, he now owns ~16.0 million shares of Twitter, giving him a 2.2% equity stake in the company, according to regulatory filings.

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Twitter smashes expectations

Dorsey’s latest stock purchase came shortly after Twitter reported its 1Q17 results, which surprisingly beat expectations. Twitter’s revenues of $548.3 million topped the consensus estimate of ~$512.0 million. The company added 9.0 million new monthly users in the quarter, well above the expected 2.3 million new monthly users.

Show of confidence or pressure to appease investors?

Does Dorsey’s purchase of Twitter stock indicate that the company is turning the corner? His accumulation of Twitter shares can be interpreted in several ways. One view could be that the CEO is confident about the company’s prospects and that he believes the stock is currently undervalued. 

If that’s the case, buying more shares could be Dorsey’s way of signaling to investors that they should be doing the same if they want to partake in the gains that he foresees.

However, Dorsey has to contend with a faction of investors calling for his ouster because they think he hasn’t done enough to turn the company around. So, purchasing Twitter shares could be Dorsey’s way of trying to appease the critics.

Subdued by Facebook

Despite recent gains, Twitter is still subdued by Facebook (FB) in terms of the user base. This trend limits its competitiveness in the online advertising market, as it also competes with Snap (SNAP) and Google, an Alphabet (GOOGL) company.

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