By Yoree Koh
Some of Twitter Inc.'s biggest and earliest backers said they
don't intend to sell shares when rules barring them to do so expire
on May 5, giving the young public company a much-needed vote of
confidence after its shares tumbled in recent months.
Rizvi Traverse Management LLC, whose 14.4% stake in the company
is the largest, does not plan to sell, according to a person
familiar with the company's thinking. The person said the firm
believes in the long-term strategy and power of the short-messaging
platform.
A spokesman for J.P. Morgan Asset Management said the firm does
not intend to sell its shares on May 5. The firm holds 8.4% of the
company's shares, the second-highest stake. Most of J.P. Morgan's
shares are managed by entities related to Rizvi.
Those statements followed Twitter's disclosure, in a Monday
filing with Securities and Exchange Commission, that two of its
co-founders, Jack Dorsey and Evan Williams as well as its CEO Dick
Costolo have no plans to sell any of their company shares. The
three men have a combined 14.8% stake in the San Francisco-based
company.
Twitter added that Benchmark Capital would not sell, or
distribute to its investors, any of its 5.4% stake on May 5
either.
"We back entrepreneurs who are making a big impact in the world.
This was true of Twitter when it was a 25-person start up and it is
true now, " said Matt Cohler, a general partner at Benchmark
Capital, in an interview. Peter Fenton, another general partner at
Benchmark, serves on Twitter's board of directors.
Collectively, the statements would place about 34% of Twitter's
shares off-limits when the lock-up expires, in the first
opportunity for Twitter executives, directors and large investors
to cash out. Some 474.4 million Twitter shares could be freed to
the market on May 5.
The decisions from Twitter's biggest investors come after a
troubling couple of months in which shares fell as investors
worried about user growth and Twitter's ad business. In less than
two months after the company's Wall Street debut in November,
Twitter shares soared as high as $74.73, from their IPO price of
$26. But they've tumbled about 37% so far this year. Monday, shares
rose 82 cents, or 2.05%, to $40.87.
Twitter said Monday that if Messrs. Dorsey, Williams or Costolo
decide to sell, they are required to do so under a prescribed
trading plan. The company said its policies require a "cooling off"
period in trading plans, so executives have to wait at least 90
days to sell stock after signaling an intent to do so.
Mr. Williams owns 9.4% of the stock, Mr. Dorsey has 4% and Mr.
Costolo has 1.4%, according to Twitter's annual proxy filed last
week. None of the three sold any of their shares when the company
went public last year.
Twitter employees had their first chance to sell a limited
quantity of shares in February. That batch was small, covering just
1.8% of outstanding shares and was mainly to give non-executive
employees a way to settle income-tax expenses from vesting shares.
More of their shares will become eligible for sale on May 5.
George Stahl contributed to this article.
Write to Yoree Koh at yoree.koh@wsj.com
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