The excitement was high when Twitter went public in the fall of 2013. Twitter's share price soared from $26 at its initial public offering (IPO) to over $73 within a few short weeks. But a year and a half later, after ups and downs, Twitter was trading well under the IPO price. To add insult to injury. Twitters debt was rated 'junks- reflecting the higher risk of default in relation to investment-grade bonds. At the same time, Twitter's market capitalization was about $25 billion (share price x outstanding shares) with annual revenues of $1A billion, while losing roughly $1 billion a year. By the summer of 2015, Dick Costolo was coming under increasing pressure because of Twitter's lack of user and revenue growth. As a consequence, he was forced to resign July 1. A former improv comedian, Costoto's leadership style involved not only frequent but also often unexpected and rapid shifts in strategy. This may have worked well in Twitter's early days when he turned the rough-and-tumble startup into a highly sought-after candidate by Wall Street for an initial public offering (IP0). Costolo struggled to define a dear and consistent strategy for a business that continued to lose money despite a tremendous cultural impact. This led to frustration and confusion among Twitter employees and other stakeholders. What Twitter needs, they argued. is a leader who takes a more proactive and strategic stance, as Mark Zuckerberg did when he declared that services on mobile devices is the future of Facebook and backed up this commitment with a high level of investments. In July 2015, Twitter co-founder Jack Dorsey returned as CEO; Dick Costolo tweeted "Welcome back, @jack!!" The question remains whether Jack Dorsey, who serverd as Twitter's CEO from 2008 to 2010, can turn the company around. He is quite busy, because he is also the CEO of Square, a mobile payment services company. Why is Twitter struggling? What role do industry and firm effects play here?

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Famous tweeting website T has been facing its ups and downs in the market since its first public off... View the full answer