Square stock plunged Thursday after its chief financial officer — viewed by some as a successor to Chief Executive Jack Dorsey — abruptly stepped down.
XSquare (SQ) stock tanked by 10.9% to 69.03 on the stock market today, marking a second straight day of double-digit losses. The Square sell-off intensified after the digital payments processor announced late Wednesday that CFO Sarah Friar will leave to become the chief executive of Nextdoor, a social network startup focused on local communities. Square shares already had dropped 10% during Wednesday's market sell-off.
Credit Suisse analyst Paul Condra said in a note to clients Thursday that Friar might have had a long wait to ascend the Square throne.
"While it had often been remarked that Ms. Friar might one day become Square's CEO, we believe current CEO Jack Dorsey intends to remain in his position for the foreseeable future and will continue to lead the company on its current path," Condra wrote.
Twitter (TWTR) and Square share the same CEO in Dorsey. Analysts have praised Friar for helping to run Square and diversify its business. Friar earlier worked at Goldman Sachs (GS) and Salesforce.com (CRM).
Square CFO Part Of Company Success
"Friar has clearly been an integral part of Square's success over the last several years, and the news of her departure is certainly a negative development," Stifel analyst Scott Devitt said in his note. "However, we expect Square will ultimately hire a candidate who embraces the company's long-term vision of building a uniquely positioned small- and medium business ecosystem with a continued focus on product/services innovation."
BTIG Research's Mark Palmer maintains a sell rating. "Friar's pending departure from Square introduces a significant new element of uncertainty into the company's story that may further weigh on its valuation," Palmer said in a report.
"As Square's CFO, Sarah steered us through an IPO and helped build a growing ecosystem of businesses that will scale into the future," Dorsey said in a statement.
Dorsey Sold Square Stock
Shares in Square met resistance in early October as shares topped 100 after a big run-up. Dorsey on Oct. 3 sold $10.1 million of Square stock, with shares priced at 97.67.
San Francisco-based Square makes credit card readers that plug into mobile phones and tablets. In addition, the company provides software for point-of-sale systems and back offices in order to manage inventory and other tasks. It also offers customer relationship management software.
Square has expanded from serving micro-merchants such as farm-stand vendors, hairstylists and coffee shops. It's now targeting bigger businesses with a broader product platform.
Square reports third-quarter earnings on Nov. 7.
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The post Square Stock Plunges As CFO, Viewed As Dorsey Successor, Leaves appeared first on Investor's Business Daily.
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