Twitter Inc (TWTR) recently hired the services of former executive of Goldman-Sachs (GS), Anthony Noto and appointed him the new Chief Financial Officer (CFO) of the company. Shares of Twitter rose 2.64% ($1.08) following the news.
Anthony Noto is replacing Mike Gupta who had steered Twitter through its Initial Public Offering (IPO) in 2013. Gupta will continue to serve Twitter as a Senior Vice-President and will be responsible for handling all strategic investments of the company going forward.
The newly-appointed CFO will get a salary of $250,000 million coupled with a one-time stock award worth $1.5 million vesting over a period of four years. Moreover, Noto will also receive a one-time grant to buy 500,000 shares.
Soon after completing his MBA, Anthony Noto had joined Goldman-Sachs as an Internet analyst in 1999. Later in 2008, he left Goldman and joined the National Football League as a CFO.
However, he returned to Goldman again in 2010. In May, 2014, he left Goldman to join New-York based hedge fund, Coatue Management LLC, where his joining was supposed to be sometime in the first week of July. Nevertheless, he joined Twitter instead.
Noto had been credited with the successful IPO of Twitter too. He had been instrumental in helping Goldman win the lead underwriter role for Twitter’s IPO.
Since, Anthony Noto had worked alongside the top executives of Twitter, he is expected to have a sound knowledge regarding the fundamentals of the company. This in turn will enable him to take decisions and lead the company to deliver robust growth.
Twitter believes that with Noto onboard, the company will be able to revive slowing user growth. Also, Twitter is hoping to cash in on Noto’s good terms with the Wall Street.
The developments follow the resignation of Twitter’s Chief Operating Officer, Ali Rowghani in Jun, 2014. We believe that these executive changes are the result of the slowdown in Twitter’s user growth.
We believe that new products and services will be major growth drivers for Twitter in the long run. As spending on online advertising is expected to increase manifold compared to traditional media, we believe that Twitter has massive growth opportunity owing to its strong mobile products. International expansion and accretive acquisitions are other significant positives.
Twitter’s ability to attract advertising revenues, despite significant competition from Facebook (FB), Weibo and market leader, Google (GOOGL), will be a key factor determining its growth. However, higher operating costs are expected to hurt profitability in the near term.
Currently, Twitter has a Zacks Rank # 3 (Hold).
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