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Elliott Management Calls on Twitter to Remove Jack Dorsey as CEO

The activist investor has taken an undisclosed stake in the company and is pressing for change.

Elliott Management Corp., the $40 billion multistrategy hedge fund firm best known as an aggressive activist investor, has taken a large stake in Twitter and is pressuring the company to oust chief executive Jack Dorsey, according to a person familiar with the investment. 

Elliott has nominated four people to the company’s board, according to the person, and the firm has met with Twitter management behind the scenes to discuss its concerns. The size of Elliott’s stake could not be determined, and the firm declined to comment on the news, which was first reported on Friday night on Bloomberg. Twitter also declined to comment.

Twitter shares climbed nearly 8 percent in after-hours trading on the news. The stock had returned about 3.6 percent for the year through Friday. 

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Twitter reported earnings on October 24 that fell well short of analyst expectations. The firm told investors that ad sales had declined in the third quarter due to technology problems, prompting a sharp selloff in the stock. The company’s fourth-quarter earnings also missed expectations, but shares rallied on the news that it reported a big jump in quarterly users. Twitter has a market cap of about $26 billion. 

Dorsey has come under fire since returning to the CEO role in 2015 to run the company he co-founded. Critics contend that Dorsey — who also holds the role at digital payments processing company Square — is not focused enough in running the social media company. Dorsey earlier announced, to investors’ consternation, that he planned to move to Africa for up to six months this year to work on blockchain and digital currency initiatives. 

Earlier this year, Elliott took a $2.5 billion stake in SoftBank, the Japanese technology investment firm lately best known for its stake in troubled co-working company WeWork

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