Both Twitter (NYSE: TWTR) employees and Elon Musk have taken to the platform to speak up in support of Jack Dorsey, the company’s CEO, as tensions increase to replace him with a new chief executive. Elliott Management, the activist hedge fund that claims Paul Singer as its leader, is allegedly attempting to oust Dorsey from his position, Bloomberg reports.
Elliott Management has swooped into Twitter and acquired major stake within the company in recent months, placing its own nominations for board members in an effort to boost it’s position on Wall Street. Right now it owns around $1 billion in shares, but since it feels that Twitter could easily be valued higher, it wants more control to be able to make the changes it thinks are necessary to do so.
What is an activist investor?
The title is a bit misleading because, no, it has nothing to do with the type of activism you’re thinking of. An activist investor is a type of investment firm that acquires large stake within a company to try and move in to make changes in-favor of increasing a company’s standing on Wall Street.
Elliott Management, an activist investment firm, is doing so with Twitter. Allegedly, the firm thinks that Dorsey is unfit for the CEO position because he splits his time between Twitter and Square—the other company for which he holds the CEO title.
But where both Twitter employees and other investors are concerned is that Elliott Management would not have the company’s best interest at heart should it succeed in taking over. Twitter, which has been brought into the discourse surrounding social media and politics, made headlines last fall when Dorsey announced that it would not allow political advertising on its platform.
Elon Musk speaks out in support of Dorsey
Elon Musk, who also splits his time as CEO between Tesla and SpaceX, spoke out in suppor amid the drama that’s trying to push Jack Dorsey out. Various employees have posted to Twitter in support of their CEO, using the hashtag #WeBackJack to stand in solidarity with the leader.
Employees have expressed concern that the transition of power from Dorsey’s hands into the hands of a firm like Elliott Management would signal changes for Twitter that would help profit, but lose the human touch that Twitter has already.
What separates Twitter from other platforms like Instagram is that advertising remains on the back burner for the company from a user experience perspective. Where major tech communications companies focus heavily on turning a profit, Twitter has largely focused on creating an authentic experience—though that decision has often come with its own set of controversies.
Should Elliott Management succeed in ousting Dorsey, it will signal a historic move as it sends the message that money can take control of a company as big as Twitter for financial gain. While Twitter does have a hard time earning new active users, it remains one of the focal social media platforms that plays a major role in everything from the success of a business, creating a smash hit song, or even accurately predicting the outcome of a political election.
Elliott has been largely silent about what it would do with more control of Twitter if it got Jack Dorsey out—which is unusual for activist investment firms that usually publicize a list of complaints alongside their attempt to take control. The only thing we know for sure? Whatever it takes to turn a greater profit.