Thoughts on Twitter After Costolo Steps Down

FactSet summary of analyst thoughts after Dick Costolo steps down on June 11, 2015

Jefferies analyst Brian Pitz
Believes move was likely driven by shareholder consensus as investors have become frustrated amid decelerating MAU growth and recent monetization issues; believes user growth and product improvements, not monetization, should be new CEO’s short-term focus – points to key assets such as Periscope, new search deal with Google, Logged Out Homepages, and Instant Timelines; believes reaffirmed Q2 guidance and lack of a CEO successor could signal potential for acquisition
Target is $60
Maintains Buy rating

Evercore ISI analyst Ken Sena
Thinks announcement further highlights the increased challenges TWTR is facing in growing and engaging its user base while trying to appeal to a more performance-minded advertiser; notes that while Q2 guidance was reiterated, user growth uncertainty remains; believes issues extend beyond user growth to advertising and content delivery as a whole – struggles to see how management change improves visibility or reduces uncertainty over the near- to medium-term
Target is $39
Maintains Hold rating

Deutsche Bank analyst Ross Sandler
Believes most investors were eager to see CEO Costolo step aside; believes strategic M&A just became slightly more possible given CEO departure coupled with no super-voting share structure, somewhat defensive board, lots of potential asset value, and current environment of cheap money; comforted by reaffirmed Q2 guidance, be expects zero-to-negative Q2 MAU adds given muted CFO commentary; highlights exploding traction at Periscope
Target is $60
Maintains Buy rating

Cowen analyst John Blackledge
Overall, not too surprised by the change in leadership given user growth and engagement challenges; views Costolo as building a strong management and driving needed product changes, like simplifying the sign-on process and other features; believes there is more work to be done on product offering to drive engagement and user growth as well as work on building or partnering on the advertising side to compete versus existing and emerging social/digital platforms; remains cautious
Target is $38
Maintains Market Perform rating

Nomura analyst Anthony DiClemente
Notes CEO departure comes amidst a period of uncertainty regarding user growth and ability to monetize at scale; believes TWTR is likely to name a product focused CEO; somewhat concerned that Dorsey will need to split his time between Twitter and Square; believes departure could reinforce likelihood of a potential strategic alternative – suggests acquisition by Google could provide synergistic benefits; sees a number of potential positive near-term catalysts including launch of DoubleClick partnership and rapid growth of Periscope
Target is $39
Maintains Neutral rating

Pacific Crest analyst Evan Wilson
Expects positive Street reaction as Costolo has long been blamed for TWTR’s user growth issues and management turnover as well as recent monetization issues; believes external pressure drove the resignation; believes high-profile should allow for an upgrade at CEO; cautiously optimistic that executive turnover could slow and execution could improve; sees obvious near-term monetization opportunities, but not confident that TWTR can return to significant user growth
Target is $52
Maintains Overweight rating