3 Questions for Twitter Inc.'s Next CEO

Source: Twitter.

3. What would make you sell the company?

Whether to sell a public company is one of the most difficult decisions that a CEO and board must grapple with. They owe it to other shareholders to make the most prudent financial decision, but that decision is rarely clear in the moment. There have been rumblings for years that the biggest tech companies are interested in acquiring Twitter, both pre-IPO and after it hit the public markets. With its market cap back under $20 billion and more appealing to potential acquirers, those rumors should pick back up.

TWTR data by YCharts

If the CEO believes that the public markets are dramatically undervaluing Twitter and that it can grow while remaining independent, putting the company up for sale would be a mistake. While it feels nice to open your brokerage account and see a stock up 30%-60% in a day based on an acquisition, investors then miss out on most of the future growth. If gobbled up by a much larger company, even if you receive shares of the acquirer, Twitter's growth wouldn't have the same impact on your wealth as it would have had it remained independent.

If the CEO believes that Twitter can be successful only by getting out of the public eye, being privy to an abundance of internal funding, and becoming a product for a larger company, then looking to sell might be the best thing. If it's truly the case that Twitter can never become a $100 billion-plus company on its own, then the best thing for current investors might be to get our premium, cash out, and look for something else with more promise. I just want to make sure the new CEO makes this decision for the right reasons and not simply to show a quick "fix," put a feather in his or her cap, and move on to the next job or a plush retirement.

The CEO selection may prove to be one of the board's most important decisions when the history of Twitter is written. I remain confident in my investment and think that a turnaround or sale have the greatest odds of occurring. There is always the risk of stagnation or outright collapse, but at these levels an investment in Twitter looks very appealing, and I will be looking to add to my position.

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The article 3 Questions for Twitter Inc.'s Next CEO originally appeared on

James Sullivan owns shares of Twitter. The Motley Fool owns and recommends Twitter. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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