Twitter CEO Jack Dorsey is expected to step down amid activist investor scrutiny, CNBC reports

Yahoo Finance's Julie Hyman, Brian Sozzi, and Brian Cheung discuss the scrutiny around Twitter and Square CEO Jack Dorsey, who is reportedly stepping down from the social media platform.

Video transcript

JULIE HYMAN: The report, I should say, that just broke a few moments ago, that coming from CNBC, that Jack Dorsey, the CEO of Twitter, is expected to step down as CEO of the company. That's according to David Faber over at CNBC. As Brian Cheung mentioned a few moments ago, the company has been under various activist scrutiny from the likes of Elliott Management.

Jack Dorsey, the CEO of both Twitter and Square, which-- just refreshing my memory here, he has been the head of Twitter going back to September of 2015. Now, during that period of time, the stock has gained by 74%. And he's been the head of Square going back to 2009, I believe, when he helped start that company, so, you know, it's not as though the stock has declined the whole time while he's been in place there, but it has under-performed the market and under-performed what some investors have been wanting him to do, Brian Sozzi.

BRIAN SOZZI: No, I would say Twitter is in the third place in terms of discussion and social media. What Snapchat is done to turn around its business and drive a better bottom line and a lot of innovation, a lot of great partnerships, for instance with retailers, has been very, very impressive. I was very critical of Snapchat in its early days. I have to tip my hat to them. I think they've done a good job to right that ship. And then you look at Facebook, I mean, it's out here-- despite all of its concerns about its platform, it's dominating this conversation with the Metaverse. And you look at Twitter, where is Twitter? It's really not in this discussion.

But even aside from this, guys-- I know we're really focused on Twitter here, but you're likely to see a lot more executive departures into year end. This is when these changes typically happen, as companies finish up their budgeting for the year ahead here. This morning, we had Walmart CO, Brett Biggs announce that he's departing. I think that, historically, normal time of the year when these things happen.

I think you have a lot of executives that are absolutely burnt out, and then also, too, I think you have a lot of executives trying to figure out what they want to do for the next decade of their life, and trying to take a swing on some big things, whatever that might be, professionally or personally.

BRIAN CHEUNG: Yeah, I mean, huge missed opportunity for Twitter not to announce this news on the kind of Wednesday night news dump before Thanksgiving where maybe people wouldn't have freaked out as much as they are right now, but I think to your point, Brian, I mean, there's a lot of questioning that needs to still be resolved here with regards to what Twitter's future is going to be.

Now of course, the shareholders, at least in the knee-jerk reaction to the news of Jack Dorsey possibly stepping down at the helm of that company, seems to be positive. That fresh blood at the top of this company could bring in, perhaps, a new pair of eyes in terms of how to better monetize this business as we discussed before the break. But I think I want to just kind of rewind to 2015, when there was the kind of question, largely at the beginning, about Dorsey being the helm of both Twitter and also Square, and one selling point, at least from Dorsey, was that there's the potential for synergies between these two companies. I mean, there weren't many other examples beyond this, but there was a brief moment where you could do, I believe it was political campaign contributions through Square that you could actually do via Twitter. So beyond that, though, there hasn't really been any argument for why Twitter and Square can play together, so Jack Dorsey maybe stepping down kind of puts a nail in the coffin to the ability of possible kind of team-up collaborations between these two companies.

And I think one other closing point here, Jack Dorsey has been very active on Twitter, very vocal as of the last few years over cryptocurrencies. You wonder if him stepping down from Twitter actually empowers him to be even more aggressive with regards to his vision for cryptocurrency, especially if he does stay at the top of Square, which is going to be a very influential fintech, finservices company in the years to come.

BRIAN SOZZI: I just find this funny-- I'll just quickly add, here, this comparison. I mean, you have a market cap on Twitter of about $40 billion here. Rivian's market cap is $100 billion. I mean, Twitter is dominant, is a dominant force in many of our lives, and Rivian only has only shipped a couple of its electric trucks. I look at that valuation disparity-- I know they're not similar companies, I understand, but I think the point here is that Jack Dorsey has not gotten too done at Twitter, and perhaps another executive with fresh eyes will in fact get it done.

JULIE HYMAN: Yeah, that's an-- I don't know if I would make that comparison, but I take your point. I mean, Square is a $100 billion company, thus-- and that stock is up more than 20% since it came public in 2015, so, you know, that company has performed very well. But the capacity-- the capacity of Twitter has always been questioned, right? How big could this be? Is it always just going to be a niche product? And I think that history bears out that it is.

Just a couple more things I want to mention. Again, just to emphasize, this is only a report as of now from CNBC. It has not been confirmed, and the company itself, Twitter-- I have been refreshing the investor relations page. There is nothing in terms of an update from the company itself. The last we heard from Dorsey himself, who is very active on the platform that he leads, was a tweet from yesterday, "I love Twitter." So, you know, who knows what that was about, or if--

He had posted something also, a link from Bitcoin magazine, so, you know, we do not yet know. What I'm trying to say is we do not yet know if he is actually stepping down. We have not gotten confirmation from the company, but certainly the stock is reacting as though we are going to get some sort of news, guys, from Twitter on this. And one would think that they would have to comment in some fashion, at some point, about this particular report, or who knows? Maybe we'll get a tweet from Dorsey at some point about it.

So watching the Twitter account, watching the investor relations page, I know we've reached out to the company as well to see if they're going to say anything about it.

I don't know. Any other closing thoughts, guys?

BRIAN CHEUNG: I mean, I think one thing just to point out is that the reporting from CNBC notes that he's expected to step down, but could he retain some other role at Twitter beyond that point? That's something that people who are reacting to the stock right now simply don't know, and we won't know until perhaps investor relations gives a little bit more clarity on this news. So again, I think the degree to which we kind of describe-- and I think a lot of this might just be the culmination of all the chatter over the last five or six years over, Oh, Dorsey should to step down from one of these companies, people might interpret this as this being a full, clean cut, but again, it's entirely possible that he still remains in the company or on the company's board in some capacity.

But again, we won't get clarity on that, but that's just something to kind of keep in mind if you're trying to make a play here.

JULIE HYMAN: Yeah, most definitely. And we also don't know if he is going to step down on what timeline, right? Is he going to say, I'm stepping down at a certain date? At the end of next year? Who knows. I mean that would be a long timeline, but the other question would be who would step into that role at Twitter? So that obviously will have some bearing on where the stock goes from here as well. Again, we're going to keep monitoring all of these