The Dick Costolo era is over for Twitter — surprising almost no one.
The social media giant announced yesterday that Costolo was leaving the CEO post July 1 after after nearly five years. The news confirmed speculation that has been bubbling for weeks in the wake of the company's lackluster financial returns.
Twitter announced disappointing earnings for the first quarter in April, missing revenue expectations and causing its stock price to plummet.
Twitter stock has been trading recently below its first-day closing price of $40.37 on Nov. 7, 2013.
Twitter shares jumped as much as 13 percent in after-hours trading as word spread of Costolo's departure yesterday, but quickly regained equilibrium.
Co-Founder Steps Up
The company's board of directors appointed Twitter co-founder Jack Dorsey as interim CEO. Dorsey will continue to serve as CEO of Square Inc., the payments and financial services company he co-founded in 2009.
Twitter offered no explanation for Costolo's departure, although it did note that he would remain on the company's board of directors.
Costolo was diplomatic in addressing his departure, saying, "I am deeply appreciative of the confidence the board, the management team and the employees have placed in me over the years, and I look forward to supporting Twitter however I can going forward.”
Richard Windsor, an analyst at Edison Investment Research in London, said today that Costolo's leaving "solves nothing." He noted that stock prices climbed on the news yesterday, but moderated when Dorsey stated that there would be no change in strategy.
"This strongly suggests that a major problem at Twitter is that the market wants to see it move into a new direction so that user growth can resume. The assumption here is that users are directly tied to revenues and in many ways that is true but focusing on user growth is the wrong way to go for Twitter," he noted in a statement.
Twitter has grappled with image problems in addition to lagging stock prices. In February, someone leaked a Costolo internal memo in which he said he was "frankly ashamed of how poorly we've dealt with (trolling and abuse) during my tenure as CEO."
"We suck at dealing with abuse and trolls on the platform and we've sucked at it for years," Costolo wrote in an internal memo obtained by The Verge. "It's no secret and the rest of the world talks about it every day. We lose core user after core user by not addressing simple trolling issues that they face every day."
He went on to say, "I take PERSONAL responsibility for our failure to deal with this as a company ... We HAVE to be able to tell each other the truth, and the truth that everybody in the world knows is that we have not effectively dealt with this problem even remotely to the degree we should have by now, and that's on me and nobody else."
According to Statista, Twitter ranked 10th among leading worldwide social networks as of March in terms of active accounts. Market leader Facebook was the first social network to surpass 1 billion registered accounts, dwarfing Twitter's user base of around 288 million monthly active accounts.
But whatever you think if Costolo's management style, he earned kudos for leaving with style and humor.
“I am tremendously proud of the Twitter team and all that the team has accomplished together during my six years with the company," Costolo said in a statement. "We have great leaders who work well together and a clear strategy that informs our objectives and priorities. There is no one better than Jack Dorsey to lead Twitter during this transition.
@robnorman I'm finally trending on Twitter.— dick costolo (@dickc) June 11, 2015
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