Twitter (NYSE: TWTR) Stock Rallies by 9 Percent

12 Aug, 2015

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Twitter (NYSE: TWTR) stock finally ended its losing streak this week on Monday, August 10th, when investments from its board members and its executive team resulted in the stock rising and closing at a 9 percent premium. Jack Dorsey, the interim Chief Executive Officer, purchased Twitter stock worth $875,000. Peter Currie, another member of the board and Anthony Noto, the Chief Financial Officer, also bought $200,000 and $248,400 worth of stocks respectively.

The three large stock purchases were done to show that the company's leadership continues to have faith in the venture. Investors concurred, thus pushing values up. Shares went up 9.1 percent and finally closed at $29.50.

Product offering and volatility

The Twitter stock fell nearly 60 percent from its January 2014 highs as it fought to increase its user base. The company also tried to prove its product - essentially a series of messages having 140 characters. Subjects of the message can be anything- from personal conversations to news. Twitter was trying to show that its service has mass appeal.

Twitter shares showed volatility, frequently dropping after the company announced its earnings reports. Wall Street repeatedly showed disappointment with the company, even after it surpassed revenue expectations repeatedly. Analysts are not happy with the stagnant user growth in United States, the biggest advertising market in the world. Twitter presently has 316 million monthly active users. It fares poorly with its rival social media giant, Facebook, having 1.49 billion users.

Reinventing Twitter

Dick Costolo, the former Chief Executive, was trying to remake the Twitter platform, changing its user experience to make it much easier to understand. Costolo also argued that the numbers of monthly active users are irrelevant as many people saw and also interacted with chosen tweets all over the Internet.

Costolo resigned from his position in the beginning of July. Dorsey is presently overseeing Twitter as the company hunts for another chief executive. The company is bleeding employees, with 450 of them leaving it during 2014 and 2015. This included important departures from corporate development and prior acquisitions teams.

Dorsey, after he bought his new tranche of 31,000 shares makes him the owner of a total 22 million shares, had not expressed any reservation about continuing in his post in a more permanent position. He already heads Square, the payments company. The list of other candidates in the chief executive post include Adam Bain, the present head of revenue in Twitter and a large number of external candidates.

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