Shares of Twitter spiked 7.9% Monday following a late-Friday report that an activist investor is pushing to replace CEO Jack Dorsey. The rally, which added more than $2 billion to Twitter's market value and brought it to $28 billion, came as the overall market began to recover from its fall last week on coronavirus-related concerns.
Elliott Management founder and billionaire investor Paul Singer is seeking to remove Dorsey from the post because his attention is divided between running Twitter and Square and his plans to move to Africa for three to six months, a person familiar with the matter told CNBC on Friday. Elliott, which has a more than $1 billion stake in Twitter, has nominated four new board members, CNBC has learned. The firm has had productive meetings with Twitter that Dorsey did not attend, according to a source close to the situation. Bloomberg first reported the news.
Twitter and Elliott Management declined to comment.
Dorsey's leadership arrangement is unusual compared with other executives of public companies. While other tech executives run multiple companies, like Tesla's Elon Musk, Dorsey is the only CEO of two public companies with market valuations of more than $5 billion.
CNBC could not immediately determine the size of Elliott's stake in Twitter, but the firm has a history of pushing for leadership changes at companies like AT&T and eBay. The firm also disclosed a $2.5 billion stake in SoftBank last month following the collapse of portfolio company WeWork's plans to go public.
Michael Levine, an analyst at Pivotal Research Group, wrote in a note Monday that he sees a "high" chance of success for Elliott in seeking to replace Dorsey and obtaining four board seats, as Bloomberg reported. Levine said he'd like to see "more strength on the operating front" by hiring a dedicated COO at Twitter.
"Particularly given Jack Dorsey, as impressive as he may be with dual CEO roles, a dedicated COO feels to us like the easiest and most important hole to fix and would have been one of our first recommendations," he wrote. "To the extent efforts to oust Dorsey are successful, having a strong one-two CEO/COO combination could only help to improve a company which we think likely stands to benefit the most from more operational improvements."
— CNBC's Alex Sherman and Julia Boorstin contributed to this report.
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