On Monday, Twitter (NYSE:TWTR) announced that its chief executive officer, Mr. Dorsey, will be stepping down from his role with immediate effect.

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While Mr. Dorsey will remain a board member of Twitter until the end of his term next year, Chief Technology Officer Parag Agrawal will succeed Mr. Dorsey as CEO.

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The news follows after almost two years of pressure from activist investor Elliott Management to step down. The firm, which has a roughly 4% stake in the company, pushed for Mr. Dorsey’s removal as Elliot’s gripe with Dorsey’s split attention between companies progressed.  

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Mr. Dorsey, also chief executive and co-founder of payments company Square, has been described by The Wall Street Journal as extremely hands-off at both companies.

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According to Reuters, Dorsey will now focus on leading Square, work pursuits in Africa, and philanthropy.  Over the past year, Twitter has fought many criticisms for being slow to introduce new features and is woefully behind many in social media.

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Mr. Dorsey himself added to the critique earlier this year, highlighting a lack of innovation, speed, and trust. Under Dorsey’s leadership, Twitter acquired a feature that allows users to host or listen to live audio conversations and rolled out advertising improvements to double annual revenue by 2023.

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However, Twitter shares have slumped in recent months while the company’s user growth decelerated in four out of the last five quarters.

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WHAT TO EXPECT

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Moving forward, The decision to put Mr. Agrawal as the new leader for Twitter signals more rapid product development as its key priority.

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Agrawal has helped lead Twitter’s work to incorporate cryptocurrencies and blockchain technologies and its long-term ambitions to change how social media companies operate.

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Investors will be curious to see how Agrawal’s technical prowess will assist Twitter’s advertising “engine” growth, but putting an engineer at the top may not automatically fix all of Twitter’s problems.

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Twitter shares surged nearly 10% after the announcement on Monday but ended the day lower, falling 2.7% to $45.78.  

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Since Mr. Dorsey returned as CEO in 2015, Twitter shares have gained 62.6%, versus 230.1% for the Nasdaq Composite. Mr. Dorsey in a statement: “I’ve decided to leave Twitter because I believe the company is ready to move on from its founders.”

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