Square Secures BlackRock Investment

Square’s wallet just got thicker.

BlackRock, the world’s largest asset management firm, picked up a 5 percent stake in the payments company, a Securities and Exchange Commission filing indicated. BlackRock paid $31.6 million for 2.8 million shares at the price of $11.32 each. This investment might be coming at an opportune time. At its IPO pricing, Square was valued at $2.9 billion. Its current market capitalization is $3.7 billion.

But since its IPO in November, Square’s shares have faced a bit of volatility, fluctuating between $12 and $13.50 per share. But the company has a lot to look forward to. Square revealed last month that its App Marketplace has connected 100,000 merchant users since its launch in 2014. Launched as a catalog of apps and solutions that integrate with Square, the App Marketplace allows merchants to handle tasks, like accounting, inventory, eCommerce and invoicing, as the company attempts to bring bigger merchants into its fold.

Square has done well at the bottom of the merchant pyramid, working with local businesses where the risks are high and the volumes low, and is trying desperately to move upstream, where the risks are lower and the volumes higher. But there is where it encounters the buzzsaw of competition far better equipped to address the needs of those merchants. Over the years, CEO Jack Dorsey’s vision for Square has expanded and contracted — from making a platform for enabling card acceptance (merchants) and card payments (wallet) to P2P with Square Cash to Square Cash for Business and a variety of services in the order ahead area that it subsequently shuttered.

Will BlackRock provide the institutional anchor Square needs?