Square Inc. shares rallied Friday after Visa Inc. revealed the size of its investment in the mobile-payments startup.
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Visa disclosed the stake in a regulatory filing on Thursday.
It is clear that Visa wants to have a larger presence in the mobile payment industry, and a more solidified partnership with Square could help give Visa a leg up on its chief rival MasterCard (MA).
Square shares were up 8 percent in afternoon trading.
Visa (V -2.3%) is one of the top five shareholders in payments firm Square (SQ -3.1%), according to a 13G filing posted this evening.
Shares of Square rose more than 9 percent, to $9.37, in early trading.
Class B shares are not typically converted to Class A shares unless the owner is looking to sell the position, and Visa did not disclose any plans to do so. It would be the second largest shareholder behind just the stake of 12.4% that is held by the large mutual fund firm Capital Research and Management, whose headquarters are located in Los Angeles. Visa was not listed as a major investor when Square launched its IPO in November 2015, suggesting the company upped its holding after Square went public.
Square stock prices have been down overall, however, since the beginning of 2016.
Jack Dorsey, the current CEO at Square is also the CEO at Twitter.
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Analysts at BTIG commented in a note to investors that Visa’s disclosure served as a “vote of confidence” for the mobile payments services company. In October 2015, Square exited a payment processing deal with Starbucks that the company estimated had produced a $56 million loss.
