CNBC’s Jim Cramer on Monday came out in favor of growing interest to replace Jack Dorsey at the helm of Twitter, the popular social media platform he helped found more than a decade ago.
“I think Twitter’s a buy, whether Jack Dorsey’s running it or not,” the “Mad Money” host said. “But at this point, I think the best thing he could do for his shareholders is just retire as CEO of Twitter and focus on running Square full time — or vice versa.”
Cramer is siding with Paul Singer and his activist hedge fund, Elliott Management, which holds more than a $1 billion stake in Twitter and wants Dorsey out. Bloomberg was the first to report the news late Friday and the stock rallied 7.89% to $35.82 in Monday’s session.
Dorsey also leads Square, the financial technology company he helped found years after Twitter that owns the popular money transfer Cash App. Dorsey holds the distinction of being chief executive of two public companies that are valued by Wall Street to be worth more than $5 billion. Because of Dorsey’s divided attention as the head of both companies, Cramer said he is the “human embodiment of hubris.”
He was also critical of Dorsey’s stated desire to move to Africa for half the year.
“It’s ridiculous to be a part-time CEO who spends six months a year hiding out in Africa,” Cramer said.
Dorsey is in his second go-around as chief executive at Twitter. Since Dorsey took over the seat in July 2015, the stock is up just 1.1% through Monday’s close, according to FactSet. In comparison, the tech-heavy Nasdaq is up 88% and Facebook, it’s larger rival, is up 126%.
Twitter has been a “long-term underperformer” under Dorsey’s tutelage in part because management “hasn’t been able to monetize that platform effectively” and there is a “fundamental lack of innovation,” motivating Elliott Management’s move to seek a shakeup in leadership, the host said.
And 2020 can turn out to be a “gigantic year” for Twitter, Cramer said.
“You’ve got the election, the Olympics [and] now the coronavirus outbreak,” he said. “They’re going to have a huge audience and these activists shareholders want that company to monetize that audience effectively.”
That’s why Cramer thinks Elliott hit the nail on the head. And he’s not alone. Evercore ISI upgraded the stock to “in line” from “underperform” Monday, citing that the activist firm’s involvement could unlock potential value in the company.
“I’ve got to imagine the board’s patience is wearing thin because this isn’t bad corporate governance — it’s no corporate governance,” Cramer said. “If Elliott can succeed in electing three candidates to the board [of directors], I bet this is going to happen.”
Disclosure: Cramer’s charitable trust owns shares of Facebook.
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