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Square ( SQ ) stock gapped up Friday after an SEC filing revealed details of a Visa ( V ) investment in Square dating back to 2011. The news of Visa’s investment was widely reported in 2011, but the size of Visa’s stake was unknown to the public until now. After rising as much as 14%, Square stock was up 4%, near 9, in afternoon trading on the stock market today . In a required SEC disclosure, Visa said it owns about 4.19 million of Square’s Class B shares, which aren’t traded on public markets. Those shares, however, are convertible into about 3.52 million Class A shares, which would give the credit card giant a 9.99% stake in those shares but a 1% stake in the business overall. In 2011, at the time of the Visa investment, the Los Angeles Times reported that the investment was “in the single-digit millions.” Now, that initial investment is worth about $32 million. In a research note Friday, BTIG analyst Mark Palmer wrote: “We think the announcement should serve as a reminder of Square’s attractiveness as an acquisition target. . . . As facilitators of electronic funds transfers like Visa, as well as technology giants such as Apple ( APPL ), Samsung and Google, continue to build out their payments capabilities, their efforts to grab turf within the space will drive consolidation.” Alphabet ( GOOGL ) is Google’s parent company. Palmer says the recent investor sell-off of Square stock is “overdone” and that he remains confident in the company’s future financial performance. His 12-month price target is 15. Square offers digital cash registers which also process payments to small and midsize businesses. In recent years it has also capitalized on the reams of data that it collects from each transaction and now offers its customers beta-based marketing services. Square also has added short-term cash advances — assessing risk based on the transaction data — and other financial services. On Square’s first day of trading in November, the stock vaulted 45% to nearly 15, which remains by far its all-time high. Initial shares priced at 9. Visa has not changed the size of its stake in Square since its initial investment, the Wall Street Journal reported , citing unnamed sources “familiar with the matter.” Scalper1 News
Scalper1 News