Twitter Spikes After-Hours on CEO Resignation, Yahoo! Plunges on Alibaba Spinoff Troubles

NEW YORK (TheStreet) -- Twitter (TWTR) surged in after-hours trading after announcing embattled CEO Dick Costolo will be resigning on July 1. Yahoo! (YHOO) tanked after analysts questioned its ability to do a tax-free spinoff of its Alibaba (BABA) stake. Alibaba tumbled following a price target cut.

Twitter spiked 7.4% in after-hours trading to $38.42. But during the regular session it fell 0.03% to close at $35.84 during the regular trading session.

The stock soared in after-hours trading when Twitter said Costolo would step down on July 1, with co-founder and Chairman Jack Dorsey filling in temporarily while the social media giant searched for a new CEO, according to a report in the Wall Street Journal.

Costolo's resignation comes at a time when Twitter's advertising strategy has come under question following its first quarter revenue miss, the Journal noted. Additionally, Twitter's user growth has only risen 18% in the past year and is a fraction of Facebook's (FB) size.

Yahoo! tanked 2.7% to finish the session at $40.93, on a day when the broader markets advanced.

The Internet pioneer plunged after Capstone analysts said it's unlikely that the U.S. Treasury Department and Internal Revenue Service would approve a tax-free spin off of Yahoo's Alibaba stake. If that happens, that could translate into a tax expense that would equal more than $11 per Yahoo share.

Currently, Capstone believes the tax-free spinoff is already accounted for in Yahoo's share price so if it's not allowed it could have a significant impact.

Additionally, UBS lowered its price target for Yahoo to $58 a share from $59 per share, according to a report in

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