Can Jack Dorsey run two public companies at the same time?
Square, the financial services and mobile payments company, filed a registration statement for an initial public offering (IPO) at the U.S. Securities and Exchange Commission, ratifying speculations that it intends to take the company public in spite of financial struggles and an odd leadership structure.
Its founder, Jack Dorsey, was recently appointed CEO of Twitter, a much larger technology company with bigger challenges to solve and more people to lead. This alone poses a risk for Square since Dorsey is obliged to spend equal or more time at Twitter. Although Square is profitable, with over $560.6 million in revenue during the first half of 2015, the company also suffered a $77.6 million loss driven by increased spending.
Square plans to list its common stock at the New York Stock Exchange, trading under the ticker symbol “SQ,” it said. In its regulatory filing, the company said it is offering up to $275 million in stock. Goldman, Sachs & Co., Morgan Stanley, and J.P. Morgan are the lead joint book-running managers of the proposed offering, while Barclays, Deutsche Bank Securities, Jefferies, RBC Capital Markets, and Stifel will act as additional book-running managers.
If the IPO succeeds, Square will have access to more capital. Jack Dorsey is the company’s largest shareholders, owning 24.4 percent of the stocks. Co-founder James McKelvey has a 9.4 percent share and Khosla Ventures owns 17.3 percent. Other shareholders include JPMC Strategic Investments (5.5 percent), Sequoia Capital (5.4 percent), and Rizvi Traverse (5.4 percent).
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Square’s strategic partnership with Starbucks is ending. While the deal allowed Square to establish its brand, it only generated $123 million in sales last year. It didn’t help when Square increased its processing rates earlier this year. The coffee giant is likely to pick another payment processor once the contract expires later this year. Sources said that Square discussed a possible acquisition deal with Google, now Alphabet, last year.