December 7, 2019 Finance and Tech Publication

Jack Dorsey’s planned move to Africa divides Square and Twitter investors

Jack Dorsey, co-founder and chief executive officer of Twitter Inc., speaks during an interview in New York, U.S., on Monday, May 1, 2017.

Michael Nagle | Bloomberg | Getty Images

Jack Dorsey’s stated plan to move to Africa for up to six months is dividing Square and Twitter analysts.

The CEO of both companies said in a tweet last week that he plans to move to the continent for as long as six months. Payment analysts say the opportunity for Square could be tremendous, but they question who will run daily operations. For Twitter, it comes in an election year in which social media companies will likely face increased scrutiny.

Dorsey has already been in Africa for the past month, reportedly meeting with crypto entrepreneurs in Nigeria. He did not say which country he plans to live in.

Africa is ‘the future of payments’

Some Square analysts see Africa as an untapped and under-served market. African countries are still heavily cash-based, meaning digital payments and the popular Cash App could make inroads. Square could also bring merchant acceptance through the point of sale systems. Lisa Ellis, partner and senior equity analyst at MoffettNathanson, said an Africa expansion “fits tightly with Square’s mission to empower the individual entrepreneur and drive financial inclusion.”

“I can see products like Square’s merchant working capital, and the ability to purchase bitcoin and do fractional investing, having significant applicability in Africa,” Ellis told CNBC. “Someone still has to ‘mind the store’ at home, though.”

The region represents the “future of payments,” according to Macquarie senior payments analyst Dan Dolev. The move could be “very forward thinking” and an opportunity to learn that market in depth, he said. Dolev is also confident that Dorsey can manage both companies remotely.

“This could provide them with a strong perspective on Africa, and a first-mover advantage in a market that will likely be very dominant in payments over the next decades,” Dolev said. “I don’t see any issues, only opportunities.”

Still, investors will likely question how Dorsey will manage the day-to-day operations of Square while he is traveling. Ellis thinks he would likely need to name an interim president or COO of Square. It’s not clear who is the heir apparent and Square declined to comment on the move beyond Dorsey’s tweet.

In the tweet, Dorsey also mentioned bitcoin. The company has leaned into cryptocurrency, launching a dedicated crypto division of Square earlier this year.

Election year

For Twitter, the timing could be tough. The U.S. is entering a presidential election year in which social media companies will likely face scrutiny for their role in influencing politics. Dorsey’s absence could become a “lingering concern” for Twitter investors if Dorsey focuses on initiatives like bitcoin — especially during a year “in which the company finds itself in the middle of the potential political firestorm,” according to Dan Ives, managing director and equity research analyst at Wedbush Securities.

“The Africa tweet raises eyebrows for investors as Dorsey is the CEO and visionary for Twitter at a time the company needs him at the helm,” Ives said. “Dorsey has proven he can handle being CEO of two public companies which is a feat in itself, but investors are focused on Twitter further monetizing its advertising platform at a pivotal juncture which will make Dorsey’s African trip a scrutinized one by the Street if there is any speed bump.”

Wall Street has been hesitant about the long-term viability of a two-company track for Dorsey. The 42-year-old founded Square in 2009, three years after starting Twitter. He has led as CEO of Square since day one but his job at Twitter has been less consistent, moving in and out of the executive chairman role in the past decade. Dorsey took over as CEO for a second time in 2015 after Dick Costolo’s departure, and what was announced as an interim leadership role became permanent. Shares of Square are up 20% this year, while Twitter is up about 5%. Both stocks are down roughly 3% year over year.

Any challenges Dorsey faces going forward would be “compounded if he is nine time zones away,” said Michael Pachter, equity research analyst at Wedbush.

“He should either be a CEO or should be a world traveler — but don’t think the two mesh together well,” Pachter said.

Yale School of Management’s Jeffrey Sonnenfeld said in order for Dorsey to leave the country for six months, he would have to formally go on leave and name an acting CEO — or at least a chief operating officer — for each company. There are also “constant” strategic, technological and financial decisions to be made on a regular basis that can’t be done remotely.

“Proximity matters for leading a company,” Sonnenfeld said. “Jack would be reckless and ego-maniacal as well as the board irresponsible and negligent, violating their duty of care under Delaware law, to let the CEO just go AWOL.”

Sonnenfeld pointed to former Apple CEO Steve Jobs, who took a couple long leaves for health reasons, but put then-COO Tim Cook in charge during his absence.

“A one-month break can be pushing it for emotional/personal R&R or intellectually recharging batteries and doing some market research, but six months is abdication,” he said.

in News
Related Posts

Elon Musk found not liable in ‘pedo guy’ defamation trial

December 6, 2019

December 6, 2019

A jury decided that Elon Musk had not defamed British caver Vernon Unsworth in a Los Angeles federal court on...

NYSE’s proposal to allow for fundraising in direct listings rejected by SEC

December 6, 2019

December 6, 2019

The Securities and Exchange Commission has rejected the New York Stock Exchange’s proposal to allow for companies going public through...

Amazon blames holiday delivery delays on winter storms and high demand

December 6, 2019

December 6, 2019

A United Parcel Service delivery driver carries Amazon.com packages in Brooklyn, N.Y. Victor J. Blue | Bloomberg | Getty Images...

Facebook has a theory that hiding ‘likes’ will increase post volume, and Instagram is testing it

December 6, 2019

December 6, 2019

Adam Mosseri, Facebook Beck Diefenbach | Reuters Once the primary currency of social media posts, “likes” on Instagram may soon...

TikTok chief to meet with lawmakers next week as suspicions about the app’s ties to China grow

December 6, 2019

December 6, 2019

Alex Zhu, CEO of TikTok John Phillips | Getty Images TikTok chief Alex Zhu will meet with lawmakers in Washington,...

It’s not just Peloton — here are some of the biggest advertising whiffs from major brands

December 6, 2019

December 6, 2019

Though Peloton‘s marketing department may be feeling the heat this week thanks to a controversial holiday ad, it’s far from...

Ulta Beauty profit beats on demand for high-margin cosmetics; shares rise 11%

December 6, 2019

December 6, 2019

Ulta Beauty beat quarterly profit estimates on Thursday, driven by sales of higher-margin cosmetics products, sending the retailer’s shares up...

How Uber is addressing its sexual assault problem after more than 3,000 incidents last year

December 6, 2019

December 6, 2019

A driver uses an Uber Technologies car service app on a mobile device while driving in Washington, D.C. Bloomberg |...

Uber reveals extent of sexual assault problem: thousands of abuse reports a year

December 5, 2019

December 5, 2019

Uber received 235 reports of a rape occurring during a ride in the United States last year — an average...

Uber reveals widespread sexual assault problem, including hundreds of reports of rape

December 5, 2019

December 5, 2019

Uber received 235 reports of a rape occurring during a ride in the United States last year — an average...

CrowdStrike rises after beating in its third quarter results

December 5, 2019

December 5, 2019

George Kurtz, co-founder and chief executive officer of Crowdstrike Inc., speaks during the Montgomery Summit in Santa Monica, California. Patrick...

Zoom shares slide as growth slows

December 5, 2019

December 5, 2019

Zoom CEO Eric Yuan speaks at the Dropbox Work In Progress Conference in San Francisco on September 25, 2019. Matt...

Facebook could someday pay an Apple-like dividend, says co-founder of social network forerunner

December 5, 2019

December 5, 2019

Facebook will probably institute a dividend in the future, Divya Narendra, who co-founded Harvard Connection, a predecessor to Facebook, told...

SoftBank’s Vision Fund 2 has held talks to invest $150 million in home health-care start-up Honor

December 5, 2019

December 5, 2019

SoftBank Group Corp. Chairman and CEO Masayoshi Son speaks during a press conference on May 9, 2018 in Tokyo, Japan....

How to see the songs and artists you listened to most on Spotify in 2019

December 5, 2019

December 5, 2019

Jerry Garcia of the Grateful Dead performs at Shoreline Amphitheatre on May 24, 1992 in Mountain View, California. (Photo by...