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Visa owns 4.2 million Square shares that could turn into 10% of the company's publicly traded stock
(Lucas Jackson/Reuters)
Square CEO Jack Dorsey
Visa disclosed it owns 4.2 million shares of Square's Class B stock, of which 3.5 million is convertible to the publicly tradable Class A stock, in a regulartory filing Thursday.
Square has roughly 30 million Class A shares traded in the public market, so Visa's holding could potentially turn into 9.99% of the company's publicly traded stock.
That doesn't mean Visa owns 9.99% of Square's entire share base, because there are roughly another 300 million Class B shares outstanding that are not traded in the public market. So its actual ownership of Square is just around 1%.
Visa is required to convert its Class B stock to Class A if they decide to sell any of it, once the lock up period expires in May.
The shares likely come from the strategic investment Visa made in Square back in 2011. The exact amount of the deal was never disclosed.
The disclosure caused Square shares to go up more than 6.75% in after hours following the filing.
Square has lost nearly 35% of its value since going public in November. Once valued at $6 billion in the private market, Square now trades at a market cap of around $2.9 billion.
Square CEO Jack Dorsey is also the CEO of Twitter, but neither company has done particularly well in the public markets. Twitter shares were down more than 4% Thursday following weak earnings the day before. Square is expected to report its first-ever earnings in early March.
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