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Could Square-Twitter Synergies Be Found in Bitcoin?

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Dec. 7 2017, Updated 7:32 a.m. ET

Pressure on Dorsey to step down

Earlier this year, Jack Dorsey, who is the chief executive of both Square (SQ) and Twitter (TWTR), said that he sees potential synergies between the companies. Dorsey made the statement in March at a time when some Twitter investors who were unhappy with the company’s performance tried to put pressure on him to step down or concentrate on running one company.

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Speculation on Square-Twitter merger

Since Dorsey made the statement about synergies between Square and Twitter, there has been speculation that he could try to merge the companies to realize the synergies. For example, combining Square and Twitter could allow Dorsey to cut costs by eliminating duplicated back-off jobs. Additionally, merging the companies could allow Square to recruit payment customers among Twitter’s subscribers and advertisers, and Twitter could also recruit advertisers and subscribers among Square’s customers. Square’s Square Cash app, a peer-to-peer money transfer service, is popular with Millennials.

Bitcoin could provide common ground for Square and Twitter

It appears that bitcoin could provide a point of convergence between Square and Twitter, potentially allowing the companies to explore the synergies that Dorsey discussed, “I want to make sure as a company, and this is not just Square but also Twitter, that we’re looking at technologies like the blockchain, like cryptocurrency, and learning from it.”

Blockchain is the technology that underlines cryptocurrencies such as bitcoin. From the above comment, it appears Dorsey believes that both Square and Twitter could benefit from bitcoin and similar technologies.

Square grew faster than Twitter

In 3Q17, Square’s top line grew 33% YoY (year-over-year), while Twitter’s top line fell 4.0% YoY. Facebook (FB), a Twitter rival, recorded revenue growth of 47% YoY in 3Q17, while PayPal, a Square competitor, posted top-line growth of 21% YoY in the same period.

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