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Square Eclipses Twitter as Market Value Tops $15 Billion

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  • Square shares have surged 189% this year vs Twitter’s 25% gain
  • CEO Jack Dorsey has a much larger stake in one of the firms

Jack Dorsey is losing at his own game. Or is he winning?

The market value of Square Inc. surpassed $15 billion Friday, making the payments player worth more than its chief executive’s other company, Twitter Inc., for the first time. Square shares have almost tripled this year as the firm has posted earnings beat after earnings beat.

Some analysts have questioned how much higher Square shares can go, and say the company may need to convince investors that it can find new ways to grow.

“Square’s valuation already reflects much of the good news that the company has to offer at this point,” BTIG analyst Mark Palmer wrote in a Nov. 9 note to clients after the company’s shares fell despite a strong third-quarter earnings report. “The stock may struggle to find its next leg up unless management can come up with additional avenues for future growth that investors are not already anticipating.”

Dorsey’s stake in Square is now worth about $2.5 billion, much higher than his $326 million interest in Twitter, according to calculations by Bloomberg.

Twitter shares have lost about a quarter of their value over the past two years, as the company has struggled to prove it can succeed as an independent business. It has been battling the perception that it’s a niche media platform, despite its emergence as U.S. President Donald Trump’s favorite communications tool. The company’s monthly active users, the most important metric for Wall Street’s valuation of Twitter, has had anemic growth over the past several quarters. 

Twitter’s growth has also been hampered by its reputation for harassment and trolling. In recent months, it has also come under scrutiny for failing to prevent Russian interference on its platform during the U.S. 2016 presidential election. The company recently testified to Congress, revealing that more than 36,000 Russian-linked accounts generated about 1.4 million automated, election-related Tweets.

— With assistance by Julie Hyman

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