By Svea Herbst-Bayliss, Sheila Dang and Chibuike Oguh (Reuters) – Twitter Inc’s (NYSE 🙂 decision to suspend President Donald Trump‘s account will test a truce made last year between CEO Jack Dorsey and major shareholders from the social media company that allowed Dorsey to remain in the top spot. In early 2020, Dorsey faced calls from Elliott Management Corp to resign, after the hedge fund argued that he was paying too little attention to Twitter while also running payment processing company Square Inc (NYSE :). He defended himself from this pressure by giving Elliott and his ally, the acquisition firm Silver Lake Partners, seats on the Twitter board. Since then, Twitter shares had risen more than 70% as of Friday, the day Twitter suspended Trump, as users flocked to the app for news in the wake of the COVID-19 pandemic. However, its shares have fallen 9% this week amid investor concerns that Trump’s ban would alienate some of his 88 million followers from the popular social media platform and trigger new momentum from lawmakers. to regulate it. An agreement that prevents Elliott and Silver Lake from seeking to influence Twitter’s content moderation and user policy expires this spring. The two investment firms declined to comment on whether they would try to intervene after the deal expires. Twitter did not respond to a request for comment or make Dorsey available for an interview. Elliott founder Paul Singer is a major financial backer of Trump’s Republican Party. The hedge fund took a 4% stake in Twitter when the stock was hovering around $ 30, and it’s still in the black with stocks now trading at around $ 47. Silver Lake invested $ 1 billion in Twitter convertible bonds that give you the equivalent of a 3% stake. Analysts and investors said the impact of the ban on Dorsey’s position among investors will depend on whether the move affects the company’s long-term growth prospects and that the chances of a regulatory crackdown on the application were difficult to assess. Many said, however, that they expected the majority of Twitter users to remain on the platform and the major shareholders to remain with the company. “We believe other tweeters can replace Trump, and we note that since November 17, Trump’s supporter count has dropped by around 180,000, and President-elect Biden‘s has risen by more than 4 million,” Bank analysts wrote. of America (NYSE 🙂 in a Note. Representatives for Twitter’s top investors, including BlackRock Inc (NYSE :), Vanguard and Fidelity, declined to comment. The reaction of advertisers, from whom Twitter derives most of its revenue, will be key. Many are drawn to the platform because of its high “engagement” with users, a measure of how active and engaged people are when using the app, and they fear being embroiled in controversy, said Mark Douglas, CEO of SteelHouse, who provides adware to help marketers reach audiences on TV, Web, and mobile media. Advertisers often withdraw their ads in times of political or cultural upheaval, such as the aftermath of George Floyd’s death in May. Twitter has recognized this risk and warned investors in October that the US election could affect its ad sales. “We are concerned that last week’s news stream will remind advertisers how dark the Twitter environment is,” said Michael Nathanson, an analyst at MoffettNathanson. Some investors said Dorsey could argue that he was left with no choice but to suspend Trump after his rally of supporters in Washington, DC, which sought to reverse the outcome of the US elections, led to the assault on the United States Capitol, which resulted in the death of five people. Other internet giants, such as Facebook Inc (NASDAQ 🙂 and the owner of Google Alphabet (NASDAQ 🙂 Inc, also cracked down on content produced by Trump and his followers. “We believe Twitter is undergoing a turnaround and will show very good growth figures. Replacing a CEO in the midst of that effort would disrupt all of those good things,” said Sahm Adrangi, founder and portfolio manager of Kerrisdale Capital Management, the company. Twitter number 40. largest shareholder.