R4_Square_Falling

Square Receives Much Needed Backing

February 22, 2024         By: Mike Dautner

A surprise announcement from Square and Visa came at a much needed time for the young online payment processing firm.

It was revealed earlier in the week in a SEC filing that Visa controls 4.19 million shares in Square. Receiving major backing from a powerhouse company like Visa could be just what Square needs.

Square has been making headlines in the financial sector realm for failing to post a profit. Some investors are also questioning the future of Square because of an apparent lack of vision.

Shares of Square have not performed well over the past year, although they have risen close to 8 percent since Visa revealed its stake. Some look at Square and notice not only a lack of profit, but also fierce competition within the online payment sector.

Many in the financial side of fintech have placed Square’s stock on a “sell” list, meaning they believe the stock is overpriced.

But receiving major backing from a company like Visa could be just what Square needs. As its stock price over the past week has shown, investors trust Visa’s judgment.

Moreover, it might also be the case that Visa could provide both resources and industry connections to Square, giving it an edge up against competition in the rapidly growing online payment sector. However, Visa’s 4.19 million shares are only Class B, meaning Visa’s voting rights in the company are subdued.