Twitter Inc TWTR and Pandora Media Inc P are the latest companies hoping that a blast from the past can kick-start their businesses. Both companies are struggling with generating profits, and both have recently named founders of the company to the CEO position in an effort to turn things around.
According to Fundstrat analyst George Gianarikas, bringing back a founder as CEO has historically been a gamble for public companies.
“Our findings suggest that investing in a founder’s return as CEO has a mixed track record with a 1) win ratio below 50 percent, 2) average returns slightly below that of the S&P 500 total return index, 3) average returns slightly below sector comp, but 4) high returns when a founder makes a successful return,” Gianarikas explained.
Related Link: Disney Has A History Of Some Messy Executive Changes<b/bzrelatedlink>
It's No Sure Thing
Image Credit: Public DomainPast examples of the successful return of founders to the CEO position include Steve Jobs’ return to Apple Inc. AAPL, Charles Schwab’s return to Charles Schwab Corp SCHW and Larry Page’s return to Alphabet Inc GOOGL GOOG.
On the other hand, other founders have flopped when returning to the CEO role, including Jerry Yang’s return to Yahoo! Inc. YHOO, Mark Pincus’ return to Zynga Inc ZNGA and Richard Hayne’s return to Urban Outfitters, Inc. URBN.
Disclosure: The author holds no position in the stocks mentioned.
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