The shares of Square Inc (SQ) are trading below its $9.00 initial public offering price (IPO) amid the market selloff. The stock price of the mobile payment services company declined more than 8% to $8.70 per share at the time of this writing around 2:04PMM in the afternoon in New York. The stock fell to as low as $8.27 per share today.
Jack Dorsey is the co-founder and CEO of Square. He is also the CEO of Twitter Inc. (TWTR) , which was tanking early and now is up close to 5%.
Walter Schloss isn’t a name many investors will have heard today. Schloss was one of the great value investors who trained under Benjamin Graham and specialized in finding cheap stocks. His track record was outstanding. In Warren Buffett’s 1984 essay, the Super Investors of Graham-and-Doddsville, he noted that between 1956 and 1984, Schloss’s firm returned Read More
Jack Dorsey is no longer a billionaire
Mr. Dorsey is no longer a billionaire as both companies struggle on the stock market. In September, Forbes estimated Mr. Dorsey’s net worth at around $2.2 billion, which was largely based on the $6 billion private valuation for Square.
His net worth dropped to $1.4 billion in November when the mobile payment services company went public. The real-time data from Forbes showed that his net worth fell to $944 million as of 10:30 AM today, according to Forbes. However, that calculation was before Twitter rallied so with back of the enevlope math we would guess he is hovering around the $1B mark. That said, The Fly calculated yesterday that Dorsey erased $5B in wealth between the two companies in just a few days – that is an astonishing feat.
It appears that investors are losing confidence in Dorsey’s ability to manage the company at the same time given the fact that most analysts covering the stock are recommending a Sell rating. Investors continue to dump their stakes in Square and Twitter.
Square has no fundamentals to support valuation
Market observers suggested that Square’s stock price is plummeting because it does not fundamentals to support its valuation. Most of them believe that the mobile payment services company will have a hard time making profits because of its low-margin and high-risk business model.
Square is also facing increasing competition in the mobile payments market. On Friday, First Data launched Clover Go, an EMV-enabled card reader that plugs into Android and iOS mobile devices and allows business owners to accept payments.
Gil Luria, an analyst at Wedbush Securities Clover Go, will affect Square’s market share. The analyst also noted Square’s reliance on its competitive payments revenue structure is a problem because it has high-cost expense structure as a company.
Meanwhile, the mobile payment services company announced the appointment of Cathy Vigrass as head of its business operations in Canada. She will focus on increasing the number of Square’s sellers and services in the country.
Ms. Vigrass said, “Canada is a critical growth market and a major opportunity for Square. I couldn’t be more thrilled to be joining Square, and I’m looking forward to working with our diverse sellers, innovative partners, and talented Canada team to continue making commerce easy.”