Dorsey Wins – Short Twitter? 

Shorting a hot stock in a trendy field like tech can be very, very dangerous, as stocks often keep rising even when their valuations become insane; see Salesforce and Amazon. But Twitter (TWTR) is a tempting short. If you’ve read the book Hatching Twitter by Nick Bilton, or just followed the circus that is the revolving CEO, you know that Twitter has managed to go from clueless start-up to an important communications vehicle despite incompetent management.

At the moment, Jack Dorsey is the company’s CEO while they conduct a CEO search, and the board seems poised to make him permanent CEO. Two problems with this; he proved his general incompetence managing Twitter when he was CEO before being fired in 2008. How incompetent? The company was quite far along and growing fast when they realized one day that no one had thought to back up any of their user data or systems. That is like building a car and forgetting about brakes, it is just so basic.

Problem number two with Dorsey is that, incidentally, he is actually the current CEO of another company, Square, which just filed for an IPO. The idea of anyone being CEO of two public companies is ludicrous. In fact, as reported on, “The CEO search committee complicated matters in mid-June by stating what seemed to be obvious: That the Twitter CEO role was a full-time job. In other words, Dorsey would have to choose between the two companies. That declaration, as it seems to have turned out, has been an empty one.”

There are a few other problems with Twitter. It does not have a well developed business plan and, despite massive usage, still seems to be deciding what it really is.

But the biggest problem with the short thesis is that it may be too late. The stock is already down about half over the last year.

Like many successful CEO’s, Dorsey’s major talents seem to lie in self-promotion, at which he is expert, and corporate infighting, having eliminated his 3 Twitter co-founders over time while often (incorrectly) referring to himself as the sole inventor of Twitter. The choice of Dorsey also lessens our respect for the Twitter board, which also has a long history of poor management choices.

The stock was actually up today 5% on rumors of Dorsey’s return, which may have to do more with the fact that investors hate uncertainty, or Dorsey may have his fans. But not us. He couldn’t manage the company when it had 15 employees, but now that it has 3,900, the board thinks he’s the best man for this (apparently) part-time job.

Editors Note: This was published after the market closed on September 30; the next day of market trading, October 1, Twitter stock fell over 8% on concerns about Dorsey.

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