Tech firms led by their founder have beaten the broader market by a large margin, from Elon Musk s Tesla Inc. to Reed Hastings Netflix Inc. Twitter Inc. has always been an outlier.
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Monday s news that Jack Dorsey is stepping down as chief executive of the social media company comes after the stock rose 63% just during the co-founder's six-year tenure. After a souring run in stock markets, Twitter has appointed Parag Agrawal, formerly the chief technology officer.
Whilst his last tweet before his resignation declared his love for the platform, Jack Dorsey hasn't been the faithful type, said AJ Bell analyst Danni Hewson, pointing out his other CEO role at Square Inc. There were a lot of investors who were wondering whether it would be better served by a new master. It has one and one that knows the ropes. Square is more than tripled in 2020 and has been a top performer in recent years, unlike Twitter. Twitter failed to keep pace with the broad rally in the indices, falling the 280% rally for the Nasdaq 100 and the 134% gain in the S&P 500 in that time. Square gains are more typical of a founder-led company.
While the likes of Mark Zuckerberg, Bill Gates, Steve Jobs and Jensen Huang were focused solely on one thing - running the company they started - Dorsey had fingers in more than one pie, said Jim Dixon, equity sales trader at Mirabaud Securities.
Since its inception in Feb. 2017, the exchange-traded fund founders have gone up 134%, surpassing a 99% advance for the S&P 500 Index. Square has a gain of more than 1,300%, making it the sixth-best performer in that time.
Other CEOs, while they might do a good job, aren't emotionally married to a company the way a founder is, said Mirabaud s Dixon.
Trade Desk Inc., owner of a platform for buying digital advertisements run by co-founder Jeff Green, is the biggest gainer on the Global X Founder Run CompaniesETF after its shares soared more than 30 fold. Other big winners include the cybersecurity company Zscaler Inc. and the car-retailer Carvana Inc. Both have gone up more than 1,800% since the start of the year 2017 inception.
Musk, who is also CEO of Space Exploration Technologies Corp., has jumped nearly 2,000% over the same period. The sale of shares on a secondary market last month resulted in a valuation of $100 billion.
Expensive software stocks have been hit hard in the past two weeks due to rising U.S. treasury yields and a hedge fund exodus. A Goldman Sachs Group Inc. basket of software companies with an enterprise value exceeding eight times sales has fallen 10% from a Nov. 16 record.
Salesforce.com, which has an enterprise value of 13 times trailing revenue, will get a chance to justify its valuation when it reports earnings on Tuesday along with several other software companies later this week. The maker of customer management software is expected to show strong revenue growth as businesses continue to prioritize spending on cloud-based services.
The earnings of Salesforce will be followed by cloud-computing company Snowflake Inc. and cybersecurity firm Okta Inc. on Wednesday and Asana Inc. and DocuSign Inc. on Thursday.
None of the Japanese recording equipment maker, Zoom Corp., has sued the U.S. video conferencing giant of the same name to protect its trademark.
None of Twitter became the latest Silicon Valley titan to appoint an Indian-born CEO, joining the likes of Microsoft and Google.
China has not issued its most comprehensive set of guidelines for the ride-hailing industry, a new blow to Didi Global Inc.
After the release of The Beatles: Get Back None Shares of Chinese semiconductor companies, such as TongFu Microelectronics Co., Disney saw the biggest increase in video streaming last week, recording a 7.1% jump in users.
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