Steven A. Cohen’s Point72 Asset Management has made a big bet on Square, the payments processing startup created by
Twitter co-founder and CEO
Jack Dorsey. The over $11 billion family office for Cohen’s fortune disclosed on Friday it now owns nearly 6.7 million Square shares, or 5.4% of the company’s outstanding stock.
Most of Point72’s investment in Square came this quarter, according to securities filings, indicating that the firm is increasingly comfortable with Square’s positioning in the competitive payments space after a bruising second quarter in which its stock fell 40%. Point72 is now Square’s third largest outside shareholder, according to data compiled by Bloomberg.
There is reason investors like Point72 are beginning to see renewed value in Square after the company’s stock fell to post IPO lows below $10 this year. Earlier in August, Square reported a narrowing quarterly loss and indicated it may extend a deal with
Square’s gross payment volumes, or the combined total of all transactions processed via Square platforms, rose 42% to $12.5 billion. And Dorsey has keyed in on a credit business, Square Capital, as a new source of growth. Square Capital extended $189 million of loans, or an increase of 123%, in the second quarter.
Square shares were up more than 1% in afternoon trading.
As investors like Point72 dive back into Square’s stock, they now have to have confidence in CEO Dorsey’s ability to manage the company’s growth while also attempting a turnaround at Twitter. In October, Twitter named Dorsey as its full-time CEO after an interim period, however, the social media company has struggled amid heightened losses, flat user engagement, and a slowing of its sales growth.
Jack Dorsey ranked 1,167 on the Forbes 2016 Billionaires List, while Cohen placed at 72.