6 ms·

Twitter Shareholder Sues CEO and Board Members Over Inflated Share Price

118 points by sergiotapia 10y ago

serg_chernata 10y ago
Is it me or is there an influx of negative news about Twitter as of late?
- hood_syntax 10y ago
  There are a lot of negative things about the current state of Twitter, more people are realizing that. If you're implying an astro-turfing campaign I'd have to say that's unlikely.
  - pyrophane 10y ago
    I agree. Twitter has had some bad, public things happen to them, which pretty much guarantees a slew commentators will pile on to prophesize their doom. It doesn't help that Twitter is a high profile company that was once the symbol of the great new age of technology companies, and that they have been known for some time now to be struggling. The narrative just fits together too well for the media at large to resist.
    - rhizome 10y ago
      Eh, the sky has been falling on Twitter ever since Arrington shat on Blaine.
- praneshp 10y ago
  To me it feels like the Yahoo story is done, and people picked on the next company to hate.
- monksy 10y ago
  The hype bubble of Twitter is being deflated.
- edoceo 10y ago
  My circles have had voca l bearish views on Twitter longer than their bearish views on Yahoo. But the bear view of Yahoo started before the Twitter IPO. Both are in a tight spot. T is just more recently "high-flying" than Y.
  - ghaff 10y ago
    The big difference is that Yahoo makes money. The disappointment with them is more in the vein of they coulda, woulda, shoulda been Google or whatever and they're not and never will be through various iterations of high profile execs. But with some exceptions (such as Flickr, maybe Finance), not that many would really care if Yahoo shut down next month. Twitter, on the other hand, operates infrastructure that a lot of people care about but can't make money and seemingly has no plan for how to change that.
    - Natsu 10y ago
      Don't they have a negative net-worth after you take out the Alibaba stake? And I think they were trying to split off that part of the company.
      - praneshp 10y ago
        They don't (as evidenced by the non-Alibaba part being sold for 4.8b).
        throwaway_exer 10y ago
        No sale yet, and 4.8b is now a mere dream.
      - lmm 10y ago
        They did if you assumed the IRS was going to approve a tax-free spin-out of the Alibaba stake (and at the price Alibaba was trading at at the time). As it transpired the IRS did not approve such a spin-out and Alibaba's price has dropped post-IPO.
- deleted 10y ago
  [deleted]
- ProAm 10y ago
  Typical death pangs of a company in trouble. Everyone is going to try and squeeze what money they can get back from their investment while company value slowly dwindles to nothing. Get ready for more layoffs to reduce enough costs to make the company look like a good buy, then once bought get ready for more layoffs.
- ghaff 10y ago
  There's certainly plenty to form the basis for a negative story and, once these story cycles get started, they tend to feed on themselves--if only because they pretty much write themselves at that point. That said, failing to find a buyer, no apparent strategy for moving forward... Hard to find a lot of positive things to say however large their user base.
- lmm 10y ago
  There's a lot, sure. To me it feels like the dam has finally burst. I don't know why we never saw any negative stories about it for so long.
antiviral 10y ago
No, it's not just you...I'd say Twitter is a sick little bird right now. It's one thing to be CEO of two companies that are doing well, with a well-established strategy and strong teams of A-grade players that are executing well. What I don't understand is how Jack Dorsey could believe he could successfully manage two companies, Square and Twitter, at the same time at such critical points in their growth. I just shake my head at the unbridled hubris and over-estimation of one's own abilities that one must have to make this decision. It's very frustrating, because I believe both companies could be so much greater at what they do; they've just touched the tip of the iceberg. It's hard enough to turn around one company successfully. But even if Dorsey is successful in the end, splitting 50% of your time somewhere else is a needless way to slim down your odds, kind of like smoking a pack of Marlboros a day and hoping to make it to 100. It happens, but that doesn't make it a good idea. Or to paraphrase from elsewhere: "It could be that the purpose of Dorsey's career is to serve as a warning for others." https://despair.com/products/mistakes https://despair.com/products/mistakes
- rpeden 10y ago
  The book Hatching Twitter doesn't speak too highly of Dorsey, his attitude, and the way he conducts himself. Having said that, I can't speak to how accurate it is. I don't know him, not do I know anyone who knows him. Like many books, it probably has its own angle/spin on the events it describes, even if the author was trying to be unbiased. Keeping that in mind, it's still an interesting read. Can anyone suggest other books, articles, or blog posts that discuss Twitter's history?
  - throwaway_birdy 10y ago
    I worked at Twitter during both of his "comebacks." He's a clown.
    - serg_chernata 10y ago
      I'm very curious, can you explain in what ways? Examples?
sctb 10y ago
We've updated the link from http://vesselnews.io/twitter-shareholder-sues-twitter-ceo-jack-dorsey-inflated-share-price/ http://vesselnews.io/twitter-shareholder-sues-twitter-ceo-ja..., which points to this.
cmurf 10y ago
I'm skeptical of a shareholder lawsuit succeeding this way. If the SEC isn't joining in, any concealment by the CEO or board, even if totally unethical, isn't illegal. If you're a shareholder and don't like how things are going it pretty much seems to me your narrow path is selling the stock and finding something more to your liking - in particular if you don't have enough shares to affect the make up of the board.
- jacquesm 10y ago
  The lawsuit need not succeed for the company to settle to make this bad news go away, depending on how sensitive they are to bad news.
- adrianratnapala 10y ago
  > don't like how things are going it pretty much seems to me your narrow path is selling the stock I don't know the law or the precedents, but it seems concealing info might be an the exception that proves the rule here. The point being you need non-lying results if you are going to decide whether to sell the stock.are lying about results, you can't
shortsightedsid 10y ago
Whenever I see twitter's share price mentioned, I think of Damodaran's valuation of Twitter stock - $18. His academic approach may be more accurate than hyped up numbers. See http://aswathdamodaran.blogspot.com/2016/02/management-matters-facebook-and-twitter.html http://aswathdamodaran.blogspot.com/2016/02/management-matte... - > The best that I can say about Twitter, at the moment, is that at $18/share, it is fairly valued, but if the company continues to be run the way it has for the last few years, both price and value could move in tandem to zero.
thomasthomas 10y ago
with all the bots on the platform, how can they accurately report any user number (mau dau)?
qwrusz 10y ago
So this lawsuit is really 90% Ev Williams selling some shares in 2015. If I am not mistaken he didn't work there anymore and had already started Medium. Also all this was public information at the time. All these insiders would have filed a notice with the SEC when they sell shares. Still, Twitter is run quite poorly and lawyers will make a lot of money on this weak ash lawsuit. Ironically this lawsuit will likely just lower the stock price even further if it has any effect at all, which I doubt it will.
cloudjacker 10y ago
because it should be $3 a share at a $2 billion market cap? oh it is about the ever changing engagement metrics that social media companies woo dollars with.

118 points by sergiotapia 10y ago

serg_chernata 10y ago

Is it me or is there an influx of negative news about Twitter as of late?

hood_syntax 10y ago
There are a lot of negative things about the current state of Twitter, more people are realizing that. If you're implying an astro-turfing campaign I'd have to say that's unlikely.
- pyrophane 10y ago
  I agree. Twitter has had some bad, public things happen to them, which pretty much guarantees a slew commentators will pile on to prophesize their doom. It doesn't help that Twitter is a high profile company that was once the symbol of the great new age of technology companies, and that they have been known for some time now to be struggling. The narrative just fits together too well for the media at large to resist.
  - rhizome 10y ago
    Eh, the sky has been falling on Twitter ever since Arrington shat on Blaine.
praneshp 10y ago
To me it feels like the Yahoo story is done, and people picked on the next company to hate.
monksy 10y ago
The hype bubble of Twitter is being deflated.
edoceo 10y ago
My circles have had voca l bearish views on Twitter longer than their bearish views on Yahoo. But the bear view of Yahoo started before the Twitter IPO. Both are in a tight spot. T is just more recently "high-flying" than Y.
- ghaff 10y ago
  The big difference is that Yahoo makes money. The disappointment with them is more in the vein of they coulda, woulda, shoulda been Google or whatever and they're not and never will be through various iterations of high profile execs. But with some exceptions (such as Flickr, maybe Finance), not that many would really care if Yahoo shut down next month. Twitter, on the other hand, operates infrastructure that a lot of people care about but can't make money and seemingly has no plan for how to change that.
  - Natsu 10y ago
    Don't they have a negative net-worth after you take out the Alibaba stake? And I think they were trying to split off that part of the company.
    - praneshp 10y ago
      They don't (as evidenced by the non-Alibaba part being sold for 4.8b).
      - throwaway_exer 10y ago
        No sale yet, and 4.8b is now a mere dream.
    - lmm 10y ago
      They did if you assumed the IRS was going to approve a tax-free spin-out of the Alibaba stake (and at the price Alibaba was trading at at the time). As it transpired the IRS did not approve such a spin-out and Alibaba's price has dropped post-IPO.
deleted 10y ago
[deleted]
ProAm 10y ago
Typical death pangs of a company in trouble. Everyone is going to try and squeeze what money they can get back from their investment while company value slowly dwindles to nothing. Get ready for more layoffs to reduce enough costs to make the company look like a good buy, then once bought get ready for more layoffs.
ghaff 10y ago
There's certainly plenty to form the basis for a negative story and, once these story cycles get started, they tend to feed on themselves--if only because they pretty much write themselves at that point. That said, failing to find a buyer, no apparent strategy for moving forward... Hard to find a lot of positive things to say however large their user base.
lmm 10y ago
There's a lot, sure. To me it feels like the dam has finally burst. I don't know why we never saw any negative stories about it for so long.

antiviral 10y ago

No, it's not just you...I'd say Twitter is a sick little bird right now. It's one thing to be CEO of two companies that are doing well, with a well-established strategy and strong teams of A-grade players that are executing well. What I don't understand is how Jack Dorsey could believe he could successfully manage two companies, Square and Twitter, at the same time at such critical points in their growth. I just shake my head at the unbridled hubris and over-estimation of one's own abilities that one must have to make this decision. It's very frustrating, because I believe both companies could be so much greater at what they do; they've just touched the tip of the iceberg. It's hard enough to turn around one company successfully. But even if Dorsey is successful in the end, splitting 50% of your time somewhere else is a needless way to slim down your odds, kind of like smoking a pack of Marlboros a day and hoping to make it to 100. It happens, but that doesn't make it a good idea. Or to paraphrase from elsewhere: "It could be that the purpose of Dorsey's career is to serve as a warning for others." https://despair.com/products/mistakes https://despair.com/products/mistakes

rpeden 10y ago
The book Hatching Twitter doesn't speak too highly of Dorsey, his attitude, and the way he conducts himself. Having said that, I can't speak to how accurate it is. I don't know him, not do I know anyone who knows him. Like many books, it probably has its own angle/spin on the events it describes, even if the author was trying to be unbiased. Keeping that in mind, it's still an interesting read. Can anyone suggest other books, articles, or blog posts that discuss Twitter's history?
- throwaway_birdy 10y ago
  I worked at Twitter during both of his "comebacks." He's a clown.
  - serg_chernata 10y ago
    I'm very curious, can you explain in what ways? Examples?

sctb 10y ago

We've updated the link from http://vesselnews.io/twitter-shareholder-sues-twitter-ceo-jack-dorsey-inflated-share-price/ http://vesselnews.io/twitter-shareholder-sues-twitter-ceo-ja..., which points to this.

cmurf 10y ago

I'm skeptical of a shareholder lawsuit succeeding this way. If the SEC isn't joining in, any concealment by the CEO or board, even if totally unethical, isn't illegal. If you're a shareholder and don't like how things are going it pretty much seems to me your narrow path is selling the stock and finding something more to your liking - in particular if you don't have enough shares to affect the make up of the board.

jacquesm 10y ago
The lawsuit need not succeed for the company to settle to make this bad news go away, depending on how sensitive they are to bad news.
adrianratnapala 10y ago
> don't like how things are going it pretty much seems to me your narrow path is selling the stock I don't know the law or the precedents, but it seems concealing info might be an the exception that proves the rule here. The point being you need non-lying results if you are going to decide whether to sell the stock.are lying about results, you can't

shortsightedsid 10y ago

Whenever I see twitter's share price mentioned, I think of Damodaran's valuation of Twitter stock - $18. His academic approach may be more accurate than hyped up numbers. See http://aswathdamodaran.blogspot.com/2016/02/management-matters-facebook-and-twitter.html http://aswathdamodaran.blogspot.com/2016/02/management-matte... - > The best that I can say about Twitter, at the moment, is that at $18/share, it is fairly valued, but if the company continues to be run the way it has for the last few years, both price and value could move in tandem to zero.

thomasthomas 10y ago

with all the bots on the platform, how can they accurately report any user number (mau dau)?

qwrusz 10y ago

So this lawsuit is really 90% Ev Williams selling some shares in 2015. If I am not mistaken he didn't work there anymore and had already started Medium. Also all this was public information at the time. All these insiders would have filed a notice with the SEC when they sell shares. Still, Twitter is run quite poorly and lawyers will make a lot of money on this weak ash lawsuit. Ironically this lawsuit will likely just lower the stock price even further if it has any effect at all, which I doubt it will.

cloudjacker 10y ago

because it should be $3 a share at a $2 billion market cap? oh it is about the ever changing engagement metrics that social media companies woo dollars with.