Give the Insider Selling a Rest, Twitter

 | Feb 09, 2015 | 12:16 PM EST  | Comments
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Memo to the board of directors of Twitter (TWTR): Someone suggest that there be a moratorium on selling stock for a bit, maybe six months, maybe a year, to show that you believe in the company. There's no reason for a rich guy like Jack Dorsey, the chairman, to necessarily sell 75,360 shares of stock as we just learned, or for CEO Dick Costolo to unload another 125,000 shares, as was reported last week.

If I were on the board I would simply say, "Hey guys, could you give it a break for a while because you are now telling a good narrative about user growth and engagement and you are starting to get people excited again about the company and its stock and your selling makes them feel foolish."

Look, last week changed the game for Twitter. It showed that the business could return to a more robust growth rate. Costolo, in an amazing interview with CNBC's Carl Quintanella, made it clear that January, not even part of the quarter, is showing continued acceleration. Plus, the reorganization of the timelines for easier use and the electric tie-up with Google (GOOGL) to enable quick following of the news we want to follow means that Twitter is morphing into your own news service -- the holy grail for users and advertisers. I find it quite exciting.

And I am glad to hear that Costolo is developing thick skin about the critics and about his own tenure. I would have said, "I serve at the behest of the board and if they don't want me I am gone." But he just said he really liked the job and likes to lead. A little lame, but better than nothing.

Still, though, when I see these big insider sales from these very rich people I am kind of aghast and it makes me feel that they don't believe; hence, the suggestion of moratorium.

Now, I am on the board of a public company, TheStreet (TST), and I have sold stock from time to time. I have also bought stock from time to time. I am given stock in lieu of some salary and, in full disclosure, I have sold some of that stock in order to diversify as it is way too much of my holdings. If we were to play am I diversified, I would have to buzz myself. That said, I am not in the league of a Dorsey or a Costolo wealth-wise and it wouldn't be that much of a sacrifice to stop the sales. Remember, I am not asking for them to buy. I just want the rain of insider selling to let up.

Why did Twitter stock go up so viciously last week? There were some good reasons and some bad ones. The bad ones first: Lots of people figured they would screw it up again, and therefore it would plummet. They didn't screw it up and that was enough of a reason to cover, or close out the short. Second bad reason: They pretty much blamed Apple (AAPL) for a glitch in the new Apple operating system that caused a decline in views. That make sense, except they took it back today. Told you it was bad.

But the good reasons? First, it felt as if Twitter got religion. That it recognized growth and earnings mattered and that it wasn't just "look at me, I am great," in play anymore. Second, Costolo seemed determined to try to get rid of the bad tweeters, the ones who only mean to hurt, intimidate, bully or stalk -- something that we all know happens too often to those who show a vulnerable side to Twitter.

I think these reasons matter, but they are counteracted by the insider selling. Give it a rest, guys. You might end up getting higher prices for your sales next year at this time, especially if you have more quarters like this one.

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