Product Management Confabulation
What Product Managers are talking about.
Tinder-owner Match Group has appointed two new members to its board of directors and signed an agreement with Elliott Management, the company announced on Monday. Chief marketing officer at Instacart, Laura Jones, and Zillow co-founder Spencer Rascoff, will be joining the board, effective immediately. Match said in a press release that the appointments followed a […]
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Could activist peace be at hand at Salesforce? With the announcement Monday that Elliott would be withdrawing its nomination for the board of directors, it seems that the CRM leader could have forged a peace agreement. The question is: At what cost?
While it’s not clear what this agreement means to the other four activist firms operating inside the company, Elliott is likely pleased with the company’s recent changes including a surprisingly strong quarter combined with some moves like shareholder buy-backs, disbanding the M&A group and cost reduction strategies (which partly translated to laying off 10% of the staff).
But this doesn’t necessarily mean that Elliott’s work is done with the company, a person familiar with the agreement told TechCrunch+.
Surprisingly, the terms between the two companies doesn’t include a standstill agreement. There wasn’t even an information-sharing agreement or any type of legal document prohibiting Elliott from speaking badly about the company, talking to the press or anything like that.
“So Elliott established an ongoing relationship. That doesn’t mean it’s walking away, or never going to come back,” said the person, who asked to remain anonymous because they were not authorized to speak publicly on behalf of the company. “Like I said, with the freedom of no standstill if everything goes south a month from now or a couple of months from now, the firm can always come back and say, ‘You know, we’re still watching. We’re still involved, and here’s what we think you should do to make it better.’ Elliott doesn’t want that to happen. But that is a possibility that could happen.”
All of that gives Elliott a lot of leeway to continue to pressure the company should circumstances warrant it. But for now, at least, Salesforce appears to have appeased the activist firm, and it has the activists off its back ahead of the stockholder’s meeting in June.
As Elliott withdraws Salesforce board nominations, activist pressure could be easing by Ron Miller originally published on TechCrunch
Salesforce is dealing with five powerful activist investors. One way to get these firms off your back is performing well, which drives up stock prices. Salesforce checked that box with a stellar quarterly report this week, beating street expectations by a wide margin.
That could buy some time for the beleaguered company, and it was certainly better than a poor report. But is it enough to keep the activist investors at bay?
On the same day the company was to report earnings, one of those activists, Elliott Management, indicated that it would be putting forth its own slate of candidates for the board of directors, a move aimed at gaining enough voting control to impose its agenda.
With successful quarterly revenue of $8.38 billion, Salesforce now faces scrutiny regarding how it could lay off 10% of its workforce amid such great performance (and news reports it paid actor Matthew McConaughey $10 million to act as a consultant). None of this is a great look for Salesforce, especially as a company that promotes itself as being a responsible capitalist.
The executive suite finds itself caught in between critics with conflicting agendas, all while trying to run a company. It’s unlikely that anyone has any sympathy for CEO Marc Benioff and his team as they try to run this gauntlet, but it is their reality for the time being.
Will this week’s promising report fend off the activist investor hawks, who are gunning for the company and pressuring it to cut costs even more? And can Salesforce manage to keep the growth trend going, especially with lower growth guidance for next fiscal year and an uncertain economy?
One thing’s clear: It’s probably not going to get easier anytime soon.
We don’t know what the activists are thinking as they look to increase the value of their investments, but Elliott Management, which invested billions of dollars in Salesforce, issued a statement after earnings came out indicating it was pleased, which is no small feat.
Will one good quarter appease the activist investors dogging Salesforce? by Ron Miller originally published on TechCrunch
Elliott Management, one of five activist investors working inside of Salesforce, has nominated a slate of candidates to the Salesforce board of directors. This move, which was confirmed by sources to TechCrunch, is an indication that negotiations to resolve this without getting to this point have broken down. CNBC was first with this news.
“Elliott has been in constructive, but intense dialogue with the company over the last few weeks, and has nominated a slate of directors to the board of Salesforce,” a person familiar with the matter told TechCrunch.
The person indicated that Elliott has been putting maximum pressure on the company through dialogue and through these nominations and the firm will be watching closely to see what happens when Salesforce reports earnings later today.
“And we’ll see what happens basically, if and when they announced things that Elliott wants to hear tonight, just improvements to the company and changes overall. And after earnings come out, that is when the firm will kind of figure out next steps.”
When a firm nominates its own slate of candidates to the board, the end goal is to get a group of people on the board who can act on behalf of Elliott and implement whatever changes they have in mind. They have not publicly stated exactly what they want, but clearly it involves cutting operations costs and increasing profits, possibly even divesting some of the non-core parts of the business.
So far the company has laid off 10% of its workforce and announced other changes like cutting its real estate footprint in an effort to slash costs.
Elliott, which announced it was taking a multi-billion stake in the company in January, is not the only activist working inside the firm right now. Starboard Value, ValueAct, Inclusive Capital and Third Point, which became involved just last month, are also high profile activists investing in Salesforce. Having five activists operating at the same time inside a company like Salesforce is highly unusual and this may be the first time it’s happened before.
Salesforce had no comment on the news. It reports earnings this afternoon after the bell.
Elliott has nominated its own slate of candidates for Salesforce board by Ron Miller originally published on TechCrunch
A week ago activist investor Elliott Management announced it had made a multibillion-dollar investment in Salesforce. By Friday, the company announced it was bringing in three new board members, and The Wall Street Journal was reporting that Elliott planned to nominate its own slate of directors.
According to people familiar with the situation, that Wall Street Journal story is accurate.
Salesforce isn’t just dealing with Elliott though. Starboard Value bought a “significant stake” in the company in October, and two other firms, ValueAct and Inclusive Capital, are also active inside the firm, per Reuters.
Perhaps it’s not surprising that Mason Morfit, CEO and chief investment officer of ValueAct Capital, is one of the three new members. He joins Arnold Donald, former president and CEO at Carnival Corporation and Mastercard CFO Sachin Mehra.
They will replace Bret Taylor, co-chair and co-CEO, who announced in November that he is stepping down at the end of the month along with longtime board members Sanford Robertson and Alan Hassenfeld, both of whom have been on the board since 2003.
Patrick Gadson, a partner at the law firm Vinson & Elkins who is in charge of shareholder activism and mergers and acquisitions, said that Elliott usually asks for board seats as a starting point in discussions with a company where it is operating to help cement their demands.
“They want much firmer commitments that usually include board representation of some sort that can help push through their thesis. So whatever it is they’re looking to do, they usually want someone in the boardroom who can hold the incumbent directors’ feet to the fire and make sure they actually do that thing,” Gadson told TechCrunch. He says the same is true for the other activists in play.
All of this appears to be moving extremely quickly, but Yahoo Finance reported on Friday that the discussions around changes in board makeup have been ongoing since last summer. That would suggest that some combination of these activists have been working behind the scenes for quite some time.
The new board members are probably a starting point as the activists push to make Salesforce more efficient and more profitable. Equity Research firm William Blair wrote in a note published on Friday that Salesforce falls well short of its peers, which it defines as software companies with over $10 billion in revenue, when it comes to operating margins.
“In comparison, this group of five companies has a similar revenue scale to Salesforce, yet has an operating margin profile of 41%, well above Salesforce, largely due to more efficient sales and marketing spend,” the company wrote. It believes that Salesforce probably couldn’t achieve that, but could reach 30%.
And it’s entirely likely that Elliott and its fellow investors are looking for something in that range. It’s worth noting that the company has already committed to margins of 25% by 2026, but that may not be bold enough or fast enough for Elliott and company.
For now, Elliott wants board representation, but it’s probably just the beginning of a long process where Elliott and its fellow activists try to force changes on the company to get spending down and profitability up in order to increase the value of the stakes these companies have taken in the CRM leader.
Board changes could signal Salesforce’s willingness to appease activist investors by Ron Miller originally published on TechCrunch
By any measure, Salesforce CEO Marc Benioff has been a successful executive. He helped build Salesforce from the ground up, starting in an apartment in San Francisco in 1999 and eventually erecting Salesforce Tower, the tallest building in the city. He took the idea of running software in the cloud and grew it into the de facto way to deliver software at a time when most companies offered software in boxes or on-prem seat licenses.
That he helped transform the way software is bought and sold is undeniable. But he’s now under intense scrutiny: Not one but two activist investors have recently taken large positions in Salesforce, meaning his decisions could be challenged on everything from acquisitions to how budgets are allocated.
For starters, Starboard Value announced in October that it was taking a sizable (but undisclosed) stake in Salesforce. Then this week, Elliott Management announced it was taking a multibillion-dollar position in the CRM leader.
Both firms usually have strong opinions about what they believe needs fixing at a company — and they typically get what they want. In this case, they likely want a more profitable, less costly Salesforce. That could involve cutting executive salaries, reducing overhead costs, laying off additional people and selling unprofitable pieces of the organization, among other things. The activist investors will probably also seek board seats.
Salesforce has already started making cuts, announcing it was laying off 10% of the workforce earlier this month. It plans to slash real estate costs, too, while reducing overall operating costs and increasing efficiency, but it might not be enough in the eyes of the new investors.
When you look at the moves Salesforce has made over the last five years, there is certainly room for criticism around the massive sums spent on acquisitions and how successfully acquired assets have been integrated and allocated. It’s possible that Elliott and Starboard were watching from afar, waiting for the company to weaken enough to question some of those decisions.
With Salesforce’s stock price down 29% over the last year and growth slowing, perhaps these firms saw the moment and made their moves. What will it mean for Salesforce and Benioff going forward? Let’s explore further.
When activist investors come calling, they typically make a list of desired changes and push for board seats to ensure those changes are put in place.
But this does not necessarily have to take an immediate hostile tone. A CEO who has been through an activist fight told me the goal at the beginning is to find common ground rather than assume a combative position with the activists.
“It’s not exactly about defense. That’s what the industry calls it, but it’s much more about understanding what your shareholders are pushing for and why are they pushing for these things. And are they right? And do you align on the time frame in which they want a certain set of things versus maybe the vision the company has over the long run?” said the executive, who requested anonymity to speak candidly to TechCrunch on background.
It’s very much a political exercise, and Benioff will have to read the pulse of other large investors and see how this all aligns. “I think that the really important blocking and tackling of this type of process is you have to be extremely close to your top 20 to 30 to 50 shareholders, and you have to understand what’s top of mind for them,” the CEO said.
All of this information will factor into Benioff’s strategy. If there are a lot of shareholders in agreement with the activists, then he’ll have to lean into their agenda more, but if the activists’ viewpoints differ from other shareholders, then he’ll have room to push back.
“So this is a very interesting kind of dance because it’s really a kind of shareholder democracy to some extent,” the executive said.
All that said, Salesforce is likely going to have to make some concessions.
As activist investors target Salesforce, what’s next for the CRM giant? by Ron Miller originally published on TechCrunch
It’s been a tumultuous time at Salesforce recently, and it’s not getting any quieter soon. The Wall Street Journal reported last night that the company now needs to deal with activist investor Elliott Management.
Elliott confirmed that it has taken a multibillion stake in Salesforce, and shared this comment from Jesse Cohn, managing partner at the firm:
“Salesforce is one of the preeminent software companies in the world, and having followed the company for nearly two decades, we have developed a deep respect for Marc Benioff and what he has built. We look forward to working constructively with Salesforce to realize the value befitting a company of its stature,” he said in a statement.
You can take from that what you will, but Elliott typically takes a stake in a company to make changes in the way the company operates with the goal of cutting costs and increasing shareholder value. In some cases, it tries to push CEO changes or even selling the company, although that seems less likely in this case.
Elliott is not the lone activist investor, however. Starboard Value also took what was described as a significant stake in October, stating it wanted more operational discipline from the company. Elliott adds to the pressure. It’s not clear how having two activists in play at the same time will work out, or if the two firms’ strategies will align. Regardless, Salesforce CEO Marc Benioff could be occupied fending off challenges to the way he runs his business.
Firms like Elliott and Starboard are typically looking for belt tightening, something that Salesforce has undertaken on its own. CFO Amy Weaver outlined a goal of more efficient operating margins of 25% by FY2026, per CNBC. One step the company has already taken is laying off 10% of its employees at the beginning of the month. It’s possible that these firms could demand deeper cuts, adding to the uncertainty that already exists at the company.
It’s been a rough time for the CRM leader with a slew of bad news. Prior to the layoffs, it announced that key executives including co-CEO Bret Taylor was leaving the company at the end of this month. Soon after, Stewart Butterfield, co-founder and CEO at Slack, the company Salesforce acquired for $28 billion at the end of 2020, announced that he too was stepping down.
The company reported revenue of over $7.8 billion, up 14%, and 19% in constant currency, which takes into account the strong dollar for revenue reported from overseas. Still, that was down from 27% growth the prior year, but at a time where all software companies are struggling in an uncertain economic environment.
TechCrunch requested a comment from Salesforce, but had yet to hear back prior to publication. If that changes, we will update the article.
No rest for Salesforce as activist investor Elliott Management takes multibillion stake in company by Ron Miller originally published on TechCrunch
Hello friends, and welcome back to Week in Review!
Last week, we took a break from contextualization for some guides to consumption. This week, we’re looking at what’s happening in the mind of one Jack Dorsey.
You can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.
(Photo by Joe Raedle/Getty Images)
While Elon Musk has shitposted his way to crypto sainthood, Jack Dorsey has been spreading the blockchain gospel far more earnestly than most.
As CEO of Twitter — which he was until Monday when he unexpectedly resigned — the bulk of his most impassioned official communications have not focused on the power of the Twitter platform or even the deep opportunities for his other company — fintech giant Square. The former double-CEO has spent the past year spreading the gospel of bitcoin, and using his multibillion-dollar enterprises to share that same message by pushing crypto-embracing features more aggressively than his peers.
He hasn’t minced words. “#Bitcoin will unite a deeply divided country. (and eventually: world),” he tweeted in August.
At a bitcoin-centric conference in Miami this year, he was even more lavish with his praise: “For me Bitcoin changes absolutely everything. What I’m drawn to the most about it is the ethos, is what it represents, are the conditions that created it, which are so rare and so special and so precious. I don’t think there’s anything more important in my lifetime to work on and I don’t think there’s anything more enabling for people around the world.”
His executive fervor led both Twitter and Square toward embracing bitcoin and blockchain-centric features that sit deep inside platforms relied on by millions. In July, Dorsey said that would be a “big part” of the company’s future. Recent initiatives at Square have included a hardware wallet to store bitcoin and the exploration of building a dedicated bitcoin mining system.
For platforms with a multitude of unsolved and often pressing issues, Dorsey’s seemingly unilateral public focus on the revolutionary power of bitcoin hasn’t always sat well with onlookers, who already worried whether his status as a dual-CEO meant he was less in-tune with the needs of his individual companies. Early last year, activist-investor hedge fund Elliott Management issued a list of demands to Twitter — chief of which was that Dorsey would step down — after quietly bulking up a sizable stake in the company.
Dorsey’s announcement that he was resigning as CEO of Twitter sent the company’s stock soaring Monday. While some rejoiced that Twitter may meet its full potential under a full-time CEO, others speculated on what Dorsey was doing and whether he might be leaving Twitter to start a “web3” company focused solely on bitcoin and blockchain-based technologies. It seems that rather than spin up a new company from scratch, Dorsey has aimed to rethink the existing stack of opportunities inside his other company, Square. On Wednesday, he announced a sweeping rebrand, renaming the fintech company initially known for its little plastic credit card dongles, as Block, a not-so-subtle nod to CEO/founder Dorsey’s deepening infatuation with the blockchain.
Unlike the public companies of yesteryear, which could juice their stock price by adding “Blockchain” to their company name, Square is no penny stock — it’s worth nearly $90 billion already. At this point, it’s worth noting that Square has explicitly indicated that there will not be a wide reorganization accompanying rebrand, though Square Crypto is getting its own brand — Spiral. That said, it’s difficult not to read between the lines, given Dorsey’s bitcoin boosterism and the recent Square initiatives, like hardware wallets and mining rigs, which could re-position the company as crypto-first.
In many ways, Block’s hodgepodge of properties, including music streaming app Tidal and the Cash App, seems like a potential full-stack web3 empire, or it could just mean the opportunity to piss off an awful lot of different stakeholders by haphazardly weaving crypto technologies into products that don’t need them.
Image Credits: GIPHY
Here are a few stories this week I think you should take a closer look at:
UK antitrust watchdog orders Meta to sell off Giphy
Facebook, now Meta, has found itself in a regulatory environment that may leave it struggling to carry out M&A business as usual. The U.K.’s Competition and Markets Authority has ordered Meta to reverse its acquisition of gif giant Giphy and sell off the startup. “The tie-up between Facebook and Giphy has already removed a potential challenger in the display advertising market. Without action, it will also allow Facebook to increase its significant market power in social media even further, through controlling competitors’ access to Giphy GIFs,” one of the group’s leaders said in a statement.
Facebook may have changed its name to disguise consumer distaste for their corporate brand, but its regulatory problems aren’t going anywhere.
Facebook’s top crypto exec leaves company
Facebook’s top cryptocurrency expert is leaving the company after years of plotting an ambitious entrance for the company into the crypto world. David Marcus, a long-time crypto supporter, previously led the company’s Messenger app team. His departure marks another major exit by a long-time Facebook executive — in September, Facebook CTO Mike Schroepfer announced he was stepping down from his role after 13 years at the company.
Despite being one of the most influential execs in the crypto space, Marcus was unable to get too much out the door at Facebook due to regulatory pressure. He indicated in his announcement that he is looking toward entrepreneurial pursuits next.
Twitter revamps safety policy
Twitter’s new CEO found himself in hot water just a day into his tenure as user backlash mounted against the company’s new safety policies. The policies, which were framed as a way to prevent harassment and abuse, outlaw sharing images or videos of private individuals without their consent. “When we are notified by individuals depicted, or by an authorized representative, that they did not consent to having their private image or video shared, we will remove it,” Twitter said in its update. “This policy is not applicable to media featuring public figures or individuals when media and accompanying Tweet text are shared in the public interest or add value to public discourse.”
It’s a very broad rule that’s certain to lead to further controversy. Twitter clearly received more backlash than expected; whether this leads to unexpected consequences in implementation is the broader question.
Image Credits: TechCrunch
Some of my favorite reads from our newly renamed TechCrunch+ subscription service this week:
Let’s talk about the SaaS selloff
“…We are not only seeing software stocks flirt with bear-market territory in technical terms, but also a pretty notable pullback in the value of even the fastest-growing technology companies. This means that public valuation multiples — key indicators for yet-private unicorns and younger startups — are shrinking. Have valuations shifted enough to slow the current venture capital bonanza? Probably not. But we could be closer to that tipping point than you’d think…”
Steps to survive and thrive while fundraising
“…So how do you prepare for this important stage in your company’s growth, navigate the challenges of a fundraise, and not let the process overwhelm the responsibility of still running your business? While not every fundraise is the same, founders can tap the experience of others who have been down this path to ensure their fundraising efforts are efficient and, most importantly, successful…“
3 ways to recruit engineers that fly below LinkedIn’s radar
“…Companies can’t let how they’ve hired in the past influence their approach today — doing so means missing not just the quantity of developers, but the quality and diversity of them. The remote revolution didn’t just broaden where we can recruit, it’s expanded who we can bring on board. With that in mind, these are the best ways to tap into the hidden developer gems…”
Thanks for reading! Again, you can get this in your inbox from the newsletter page, and follow my tweets @lucasmtny.
Twitter CEO Jack Dorsey might not spend six months a year in Africa, claims the real product development is under the hood, and gives an excuse for deleting Vine before it could become TikTok. Today he tweeted, via Twitter’s investor relations account, a multi-pronged defense of his leadership and the company’s progress.
The proclamations come as notorious activist investor Elliott Management prepares to pressure Twitter into a slew of reforms, potentially including replacing Dorsey with a new CEO, Bloomberg reported last week. Sources confirmed to TechCrunch that Elliott has taken a 4% to 5% stake in Twitter. Elliott has previously bullied eBay, AT&T, and othe major corporations into making changes and triggered CEO departures.
Specifically, Elliott is seeking change because of Twitter’s weak market performance, which as of last month had fallen 6.2% since July 2015 while Facebook had grown 121%. The corporate raider reportedly takes issue with Dorsey also running fintech giant Square, and having planned to spend up to six months a year in Africa. Dorsey tweeted that “Africa will define the future (especially the bitcoin one!)”, despite cryptocurrency having little to do with Twitter.
Rapid executive turnover is another sore spot. Finally, Twitter is seen as moving glacially slow on product development, with little about its core service changing in the past five years beyond a move from 140 to 280 characters per tweet. Competing social apps like Facebook and Snapchat have made landmark acquisitions and launched significant new products like Marketplace, Stories, and Discover.
Dorsey spoke today at the Morgan Stanley investor conference, though apparently didn’t field questions about Elliott’s incursion. The CEO did take to his platform to lay out an argument for why Twitter is doing better than it looks, though without mentioning the activist investor directly. That type of response without mentioning to whom it’s directed, is popularly known as a subtweet. Here’s what he outlined:
On democracy: Twitter has prioritized healthy conversation and now “the #1 initiative is the integrity of the conversation around the elections” around the world, which it’s learning from. It’s now using humans and machine learning to weed out misinformation, yet Twitter still hasn’t rolled out labels on false news despite Facebook launching them in late 2016.
On revenue: Twitter expects to complete a rebuild of its core ad server in the first half of 2020, and it’s improving the experience of mobile app install ads so it can court more performance ad dollars. This comes seven years late to Facebook’s big push around app install ads.
On shutting down products: Dorsey claims that “5 years ago we had to do a really hard reset and that takes time to build from… we had been a company that was trying to do too many things…” But was it? Other than Moments, which largely flopped, and the move to the algorithmic feed ranking, Twitter sure didn’t seem to be doing too much and was already being criticized for slow product evolution as it tried to avoid disturbing its most hardcore users.
On stagnanation: “Some people talk about the slow pace of development at Twitter. The expectation is to see surface level changes, but the most impactful changes are happening below the surface” Dorsey claims, citing using machine learning to improve feed and notification relevance
Yet it seems telling that Twitter suddenly announced yesterday that it was testing Instagram Stories-esque feature Fleets in Brazil. No launch event. No US beta. No indication of when it might roll out elsewhere. It seems like hasty and suspiciously convenient timing for a reveal that might convince investors it is actually building new things.
On talent: Twitter is apparently hiring top engineers “that maybe we couldn’t get 3 years ago”. 2017 was also Twitter’s share price low point of $14 compared to $34 today, so it’s not much of an accomplishment that hiring is easier now. Dorsey claims that “Engineering is my main focus. Everything else follows from that.” Yet it’s been years since fail whales were prevalent, and the core concern now is that there’s not enough to do on Twitter, rather than what it does offer doesn’t function well.
On Jack himself: Dorsey says he should have added more context “about my intention to spend a few months in Africa this year”, including its growing population that’s still getting online. Yet the “Huge opportunity especially for young people to join Twitter” seemed far from his mind as he focused on how crypto trading was driving adoption of Square’s Cash App
“I need to reevaluate” the plan to work from Africa “in light of COVID-19 and everything else going on”. That makes coronavirus a nice scapegoat for the decision while the phrase “everything else” is doing some very heavy lifting in the face of Elliott’s activist investing.
Photographer: Cole Burston/Bloomberg via Getty Images
On fighting harassment: Nothing. The fact that Twitter’s most severe ongoing problem doesn’t even get a mention should clue you in to how many troubles have stacked up in front of Dorsey
Running Twitter is a big job. So big it’s seen a slew of leaders ranging from founders like Ev Williams to hired guns like Dick Costolo peel off after mediocre performance. If Dorsey wants to stay CEO, that should be his full-time, work-from-headquarters gig.
This isn’t just another business. Twitter is a crucial communications utility for the world. Its absence of innovation, failure to defend vulnerable users, and an inability to deliver financially has massive repercussions for society. It means Twitter hasn’t had the products or kept the users to earn the profits to be able to invest in solving its problems. Making Twitter live up to its potential is no sidehustle.
When Elliott Management, a New York investment firm with an activist approach, sets its sights on a company, it usually means it has been under-performing, and it sees a ton of unmet potential. News broke on Friday that the company had bought a substantial stake in Twitter and was seeking board seats.
Sources have confirmed this information and say the stake is in the 4-5% range. The company is looking to take three or four board seats and wants to implement big changes, including, as reported, replacing Jack Dorsey as CEO.
Sources say that Dorsey has too many side projects, particularly Square, but also his growing interest in crypto currency and Africa, and that Twitter requires a full-time, focused chief executive. The sources indicated that they aren’t discounting Dorsey completely, and if he were willing to drop his other projects, the firm would entertain the idea of retaining him.
The company is also reportedly concerned about the constant executive turnover in key positions like product manager, and they are hoping to stabilize this. Yet like any Elliott target, this one is undervalued, but has the potential for much greater income than it’s currently generating.
As in the past, you can probably expect at some point that Elliott will share a public letter with shareholders outlining the problems it has observed, and the path, as it sees it, to a more stable and profitable future. The company sent such a letter to eBay last year, which announced plans to execute on that plan shortly thereafter. It is reasonable to assume it will follow a similar pattern with Twitter.
It is hard not to look at this deal in the context of Elliott founder and principal Paul Singer’s politics. He is a big contributor to the Republican Party, but sources say this deal is about money, not politics.
They say that the fund manages a large swath of investors, from pension funds to charitable endowments, with a fiduciary responsibility to those organizations, and considered the idea of introducing politics into an investment decision to be, in the words of one source, “ridiculous.” Voices on the Twitter platform over the weekend didn’t agree, suggesting it’s a political move by Singer.
Regardless, big changes will likely be coming to Twitter, and that could involve the user experience, new products and very likely more advertising, as the new boss looks to unlock the financial potential in the platform.
Twitter stock was up more than 8% on the news as we published this post.