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Elliott Builds $1 Billion Stake in Twitter Stock, Wants Change

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Elliott Management has built a large stake in Twitter (NYSE:TWTR) stock. According to media reports, the fund wants to make some changes—like replacing the company’s current CEO.

Elliott Management is hedge fund with about $40 billion in assets under management. The fund has accumulated $1.0 billion in Twitter shares, according to a report from the Wall Street Journal. The amount is roughly 4.0% of Twitter stock.

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According to a Reuters report, Elliott Management has nominated several of its representatives to stand for election to Twitter’s board. Three board seats will be up for contest when Twitter holds its annual shareholder meeting later this year. The report also stated that the fund wants to oust Twitter CEO Jack Dorsey.

Dorsey served as Twitter’s CEO in the company’s early years but left in 2008. He returned to the role in 2015 when he replaced Dick Costolo. However, Dorsey doesn’t just run Twitter. He’s also the CEO of Square (NYSE:SQ)—a financial services company that reported strong financial results last week. Elliott Management wants Twitter to have a full-time CEO.

Dorsey owns about a 2.0% stake in Twitter stock

In addition to being Twitter’s CEO, Dorsey is also a big investor in the company. He owns about 2.0% of Twitter stock. He led the company to its first annual profit in 2018. Twitter posted a profit of $1.2 billion in 2018, which rose to $1.5 billion in 2019. Like Facebook (NASDAQ:FB) and Alphabet (NASDAQ:GOOGL), Twitter derives most of its revenue from advertising sales. The company’s advertising sales rose to $3.0 billion in 2019 from $2.6 billion in 2018.

Twitter stock has gained 26% since the company confirmed Dorsey as its substantive CEO on October 5, 2015.

eBay reviewed its businesses amid pressure from Elliott

Twitter joins the list of technology companies that Elliott Management has targeted recently. The fund has pushed for changes to enhance shareholder value. Last year, Elliott Management took a significant stake in eBay (NASDAQ:EBAY) and pushed the company’s management to make several changes.

Elliott Management urged eBay to divest its side businesses so it could focus on its marketplace operation. In keeping with the fund’s demands, eBay sold its online ticketing business StubHub for $4.1 billion. The company announced a boost to its stock repurchase program after the StubHub transaction. The company is also in talks that could result in the sale of its online advertising business eBay Classifieds. Sprint parent SoftBank is also in Elliott Management’s crosshairs.

Twitter stock fell 13% last week amid a broad sell-off in stocks. The coronavirus situation weighed on investor sentiment.

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