Twitter Inc’s CEO Jack Dorsey has stepped down from his role following which Parag Agrawal, Twitter’s Chief Technology Officer is set to lead the company.
Agrawal, a 10-year veteran in Twitter, has signaled a tacit endorsement of a board strategy the company had previously laid out to double its annual revenue by 2023, even though investors were not so sure of it.
With the news reaching the market, Twitter’s shares surged by nearly 10% and closed down by 2.7%.
Dorsey, who co-founded Twitter in 2006, is stepping down the company after overseeing the launch of new ways to create content through newsletters or audio conversations while simultaneously serving as CEO of his payments processing company Square Inc.
Dorset will however continue to remain on the company’s board until his term expires at the 2022 annual shareholder meeting, said the company.
In an email to employees, Dorsey said Agrawal has the leadership qualities required to head the company; he also named Bret Taylor as the new chairman of the board and shared his confidence in the “ambition and potential” of Twitter’s employees.
“I’m really sad … yet really happy,” wrote Dorsey. He went on to add, “There aren’t many companies that get to this level,” and that the decision to step down “was my decision and I own it.”
“We recently updated our strategy to hit ambitious goals, and I believe that strategy to be bold and right,” said Agrawal in an email to employees. “But our critical challenge is how we work to execute against it and deliver results.”
Under Dorsey’s leadership, Twitter acquired email newsletter service Revue and launched Spaces, a feature that allows users to host or listen to live audio conversations.
Twitter also rolled out advertising improvements to help brands find Twitter users likely to be interested in their product, a key component of the company’s goal to double annual revenue by 2023.
In recent months, Twitter’s shares have trod downwards piling more pressure on Dorsey to end his unusual arrangement of being CEO of two public companies.
Last year, hedge fund Elliott Management Corp had called on Dorsey to step down, since it said he was paying too little attention to Twitter while also running Square Inc.
Dorsey fended off the pressure by giving Elliott and its ally, buyout firm Silver Lake Partners, seats on Twitter’s board.
Following Dorsey’s letter, Elliott Managing Partner Jesse Cohn and Marc Steinberg, a senior portfolio manager, endorsed the passing of the baton saying, “We are confident that they (Agrawal and Taylor) are the right leaders for Twitter at this pivotal moment for the company.”
According to a source familiar with the matter at hand, Dorsey will now focus on leading Square and other pursuits including philanthropy. The source went on to add, Twitter’s board has been preparing for Dorsey’s departure since 2020.
Investors are hoping Agrawal’s technical prowess will help Twitter’s advertising “engine” grow, said analysts from Baird Equity Research.
As investors digested the news, it is likely that the market realized Agrawal’s “mountain to scale” to reach the company’s revenue targets and felt “some disappointment that a Twitter outsider hasn’t been brought in to offer fresh ideas,” said Susannah Streeter, an analyst at Hargreaves Lansdown.