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Historical Analysis: Do Returning Founder CEOs Boost A Company's Stock Price?

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Historical Analysis: Do Returning Founder CEOs Boost A Company's Stock Price?

Twitter Inc (NYSE: TWTR) and Pandora Media Inc (NYSE: 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

It's No Sure Thing

Past examples of the successful return of founders to the CEO position include Steve Jobs’ return to Apple Inc. (NASDAQ: AAPL), Charles Schwab’s return to Charles Schwab Corp (NYSE: SCHW) and Larry Page’s return to Alphabet Inc (NASDAQ: GOOGL) (NASDAQ: GOOG).

On the other hand, other founders have flopped when returning to the CEO role, including Jerry Yang’s return to Yahoo! Inc. (NASDAQ: YHOO), Mark Pincus’ return to Zynga Inc (NASDAQ: ZNGA) and Richard Hayne’s return to Urban Outfitters, Inc. (NASDAQ: URBN).

Disclosure: The author holds no position in the stocks mentioned.

Image Credit: Public Domain

Latest Ratings for TWTR

DateFirmActionFromTo
Feb 2020Aegis CapitalMaintainsHold
Feb 2020Canaccord GenuityMaintainsHold
Feb 2020Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for TWTR
View the Latest Analyst Ratings

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SNPSCFRAMaintains160.0
GRPNMorgan StanleyMaintains1.5
PPCCFRADowngrades30.0
HMSYCantor FitzgeraldReiterates33.0
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