Twitter’s Chief Executive Officer Dick Costolo abruptly announced (PDF) he was stepping down on Thursday amid increasing scrutiny of the company's slow user growth and inability to attract advertisers at the same rate as its competitors.
Costolo, who recently told re/code “the board and I are in sync” will be replaced by co-founder Jack Dorsey on an interim basis.
Wall Street reacted positively to the news, as Twitter shares rose to $37.17, up 3.6 percent, after the announcement, meaning investors thought Twitter was worth $900 million more without Costolo than with him.
Less harsh were tweets such as one from Chris Sacca, one of Twitter's earliest investors, who posted an 8,500-word manifesto earlier this month calling on the company to better engage its users.
On Thursday Sacca tweeted, "In under five years as CEO, @dickc grew Twitter from a $3b valuation to a $23b valuation. Credit where credit is due."
According to a source familiar with the matter, it was Costolo's decision to leave, and Costolo said he brought it up with the board last year as it began talking about succession planning.
Twitter has had a number of shake-ups in its management. Co-founders Dorsey and Evan Williams both served as CEOs of the company before Costolo, and Costolo has overhauled much of his management team over the past year.
"Unfortunately this news isn't surprising," said Nate Elliott of management consultant Forrester Research. "The bottom line is that Twitter isn't very good right now at serving either its users or its marketers."
Costolo, who said on a conference call that Twitter will consider both internal and external candidates for its next CEO, will step down on July 1 and will continue to serve on the board, according to the company.
Twitter has long struggled to gain users at the rate of other social media companies such as Facebook, Instagram and Snapchat.
Data firm eMarketer projects that Twitter's monthly user base will grow at 14.1 percent this year, compared to more than 30 percent two years ago.
Twitter's stock has also lagged some of its peers since its closing price after its first day of trading. Since its IPO on Nov. 7, 2013, it has dropped 20 percent, compared to a 72 percent increase for Facebook, a 9 percent increase for Google and a27 percent increase for Yahoo.