Jack Dorsey, founder and CEO of social media platform Twitter and mobile payments company Square, announced his plans to move to Africa for up to six months in mid-2020, worrying investors in both of his companies.
Social media companies, such as Twitter, are likely to face increased scrutiny in the upcoming election year, its investors say. On the other hand, payment analysts for Square say that the business opportunity in Africa could be tremendous.
Both sets of investors are concerned about who will run daily operations.
While some praise the move as a wise decision to explore the developing market in Africa, others say Dorsey will not be an effective leader if he’s based on another continent.
The uncertainty sent Square’s stock 5 percent lower as investors pondered exactly what Dorsey’s absence would mean for the company.
Some observers have been critical of Dorsey’s planned trip to Africa.
“Proximity matters for leading a company. 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,” said Jeffrey Sonnenfeld of the Yale School of Management.
“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,” said Daniel Ives, managing director and equity research analyst at Wedbush Securities.
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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 the CEO 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 Ives.
