Twitter CEO Dick Costolo’s resignation news brings a sigh of relief from CNBC’s Jim Cramer, who believes the company is a good but very mismanaged one. The Mad Money host said that for a company that is talked about regularly, it is very disappointing that so many investors are leaving just because of the mismanagement.
Twitter (TWTR) a “hidden diamond”
Cramer referred to Twitter Inc (NYSE:TWTR) as a “hidden diamond” on the “verge of being seen as a cubic zirconium because of an almost universal acknowledgement by everyone I know that the CEO was in over his head.” Cramer said that the only way the company could improve is to “call ABC—anybody but Costolo.”
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The resignation of Costolo and the statement from the micro-blogging firm that it earnings will be in line with the previous forecasts, Cramer believes, provide good reasons to own the stock. The expert believes this is a good time to own the stock as the company might improve under a new CEO or if acquired by any other firm.
Uncertainty still prevails
On Thursday, Twitter Inc (NYSE:TWTR) revealed that Costolo will step down on July 1 but will remain on the board. Jack Dorsey, Twitter co-founder and Square CEO, has been named interim CEO. Since going public, Twitter Inc (NYSE:TWTR) posted its weakest quarterly revenue growth last quarter. User growth was up only 4.86%, and the net loss increased to 23% on year to $162 million. Since the quarterly results, shares of the micro-blogging firm are down 18%.
The exit of Costolo has long been expected, but traders note that the move may not help the stock much. Bob Doll, chief equity strategist and senior portfolio manager at Nuveen Asset Management, told CNBC that doubts are still there regarding strategy, user growth and innovation. “There are many, if not more uncertainties today than there were yesterday,” the expert noted. Initially, the stock responded positively to the news, gaining 7% in after-hours trading, but later it was up just 3%.
The decision about Costolo’s exit follows growing pressure on management. Recently, one of Twitter Inc (NYSE:TWTR)’s biggest investors, Chris Sacca, in an 8,000-word essay, suggested improvements to boost user growth.
On Thursday, Twitter Inc (NYSE:TWTR) shares closed down 0.06% at $35.83, and year to date, the stock is almost flat.