Twitter Inc Stock Up After Analyst Predicts Exit Of Costolo

Updated on

Twitter shares gained after one analyst predicted that CEO Dick Costolo will exit the company next year. This year Twitter shares tumbled 39%, and at present, they are trading below the company’s initial public offering closing price from November 2013 of $44.90 per share.

Former Yahoo boss could replace Costolo

Costolo has long been under investors’ and analysts’ scrutiny regarding his strategies and performance of the company.

Gates Cap Management Reduces Risk After Rare Down Year

Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More

“It’s the No. 1 question I get when I walk in to talk to institutional investors,” Robert Peck of SunTrust said, when asked by a CNBC reporter if Costolo will “make it out of 2015.”

“We think there’s a good chance he’s not there within a year,” said Peck.

Peck also talked about the candidates he feels should replace Costolo, including Ross Levinsohn, former CEO of Yahoo. There are talks that CFO Anthony Noto, a former Goldman Sachs banker, could replace Costolo, but to this, Peck said there are many eligible candidates for the CEO post, and “coupling [Noto] with a large media personality … would be received very well.”

Peck made this prediction for Twitter while talking about internet tech stocks in 2015. The analyst also said this year, Asian companies will expand internationally and will come to the United States.

Investors, employees losing confidence in Twitter CEO

Investors are losing confidence in Twitter, doubting the company’s future with slowing user growth and frustration about Costolo’s inability to demonstrate that the company can go beyond just being a micro-blogging company.

Twitter has a monthly active user base of 284 million, compared to Facebook’s 1.35 billion monthly active users. Costolo has received flak across the market for bringing in a slew of strategy reforms and seemingly not-so-intelligent leadership tactics such as showing exit doors to five high profile executives since the company’s high-profile IPO.

Recently Costolo’s trust offloaded Twitter shares, receiving strong criticism from Wall Street. A recent report from Business Insider, which cites a major shareholder in the company, said selling the shares speaks louder than any words, and as CEO, questions how he will face employees when he is busy reserving a “lifeboat” for himself. The investor reportedly went on to say that Costolo has lost employees’ respect and also the respect of the market.

Further, the investor said employees of Twitter know the potential of the company and also that Costolo is a hurdle in achieving it. The reaction from the investor clearly suggests discontent among investors and market watchers with Costolo.

Subscribe to ValueWalk!

Get updates on the latest posts and more from ValueWalk straight to your inbox.