Visa takes stake in mobile-payments company Square

Prior to its November IPO, Square had reported that losses increased in 2014 to more than $154 million on revenue of more than 850 million. Mr. Dorsey first announced the credit card company’s investment in his firm in April 2011, when it was still a private company. Square’s overall stake in the company is closer to 1.1%.

Shares of Square hit a high of $9.74 in morning trading in NY, before retreating to $9.40, up 9% on the day. The company has launched Visa Digital Solutions, an initiative geared toward secure payments using mobile devices.

Square may also face more competition from tech giants Alphabet, Facebook, Amazon and Apple – which would all love to get a bigger piece of the growing mobile payments market.

If Visa were to convert the stock, it would in turn hold a stake of almost 10% in the mobile payment business.

Market observers suggested that investors usually convert their Class B shares in a company if they intend to sell.

Visa’s filing was a statement of an existing position, known as a 13G; such quarterly filings must be made by next week.

As a result, Visa is now the second-largest owner of Square’s A shares – trailing only mutual fund giant Capital Research & Management. The exact figures of Visa’s stake weren’t disclosed at the time of Square’s IPO.

Shares of Square spiked 14 percent before the opening bell Friday. The terms of the deal between Visa and Square are unknown.

Some investors have also expressed worries about Dorsey’s ability to run both Square and Twitter – which requires a lot of his time given its troubles. As of the company’s closing price yester, Square stock prices are down over 30% since the start of the New Year. Visa shares climbed 2.9% to $70.42.