Twitter Inc is reportedly considering appointing Jack Dorsey as the full-time CEO. If Dorsey takes up this second and possibly more demanding job, then the upcoming IPO of his digital payments company, Square, could take a price hit, says a report from Reuters.
Square investors may demand compensation
Citing experts, Reuters says that running two firms will be too much work for Dorsey, and the fact that neither of the two are going smoothly, may not help investors believe that Square is worth betting on.
Lise Buyer, an IPO consultant with Class V Group in Silicon Valley, told Reuters, “Management and management focus are the single most determining factor of the success or lack thereof of a company pursuing an IPO.” Buyer, who helped guide Google’s IPO in the past, said if she were an investor in Square, she would have wanted to be compensated for the cost of a part-time CEO who had a “full plate, already.” She would have expected a lower valuation as compensation.
Square was valued at $6n when it went for its last funding about a year ago. There are reports that the firm has filed a confidential public offering, and its public filing is ‘imminent.’ This suggests, Square could be a public firm by the end-of-year holiday season. As of now, there is no indication on how Square might price its stock. Owing to the recent crisis at Twitter Inc , Square could push back the IPO, and the market volatility will provide an easy cover for the delay.
Twitter CEO search still on
Meanwhile, one more day passed without Twitter naming its new CEO. On Wednesday, there were reports that Dorsey’s appointment as the full-time CEO was imminent. Twitter’s stock went up by more than 5% after such reports as investors expressed confidence on Dorsey to fuel growth in the micro-blogging firm that has reached stagnation. However, after no such announcements came on Thursday, Twitter shares tanked 8.4% thus offsetting the gains bagged the day before.
Dorsey is presently the interim CEO at Twitter Inc , and the CEO at Square, a mobile payments firm he co-founded in 2009. In 2008, Dorsey’s previous stint as Twitter’s CEO came to rough end, when he was ousted after a power struggle with co-founder Ev Williams. Many analysts and investors believe that Dorsey will apparently be allowed to keep both his jobs.
On Thursday, Twitter shares closed down 8.43% at $24.67. Year to date, shares are down over 31%.