One of the most disturbing trends in business and fashion is the rise of the “CEO bros.” You know the type: a privileged, well-pedigreed man who thinks wearing a suit jacket, ripped jeans and Vans sneakers is even remotely professional attire.
Despite my disagreement with such unfortunately increasing imagery, my favorite CEO bro is Square’s (NYSE:SQ) Jack Dorsey. I’ll easily forgive him for showing up at a business meeting wearing the above items: Dorsey is articulate, passionate and has a knack for the unconventional. Longtime shareholders of Square stock are fortunate to have such an effective, visionary leader.
Indeed, one of the reasons why SQ stock has never truly suffered from having a bro at the helm is that Dorsey has the guts to make the tough decisions. Typically, I’ll argue, they’re the right ones. But recently, a development popped up that has everyone — including me — rethinking their Dorsey love affair.
A few days ago, Square’s CEO announced through a Twitter (NYSE:TWTR) post that he’ll leave for Africa for up to six months next year. Naturally, that got the blogosphere — along with the mainstream business media — spouting off their opinions. Of course, this has serious implications for both Square stock and TWTR.
On one hand, Dorsey isn’t just bailing on his two companies (as you know, he’s also CEO of Twitter). By moving to Africa, he’ll have a first-hand look at invigorating the continent for digitalization; specifically, to build infrastructures for digital payments, which directly correlates with SQ stock.
On the other hand, Dorsey is leaving Twitter at a critical time both politically and strategically. How then should investors respond to Square stock?
Africa Is a Long-Term Boon for Square Stock
There’s a lot to unpack here. Ultimately, your sentiment regarding Dorsey’s potential move (assuming he’s not trolling us) is whether you own SQ stock or TWTR. If the former, you may want to extend the timeframe in which you initially intended to hold shares.
From multiple angles, Africa — particularly sub-Saharan Africa — is a goldmine of opportunities. For starters, the area is demographically robust. According to the United Nations, Africa’s population will jump to 2.5 billion in 2050. And 50 years from that point, the population may reach 4 billion.
For perspective, the world’s largest country population wise is China, measuring around 1.4 billion people.
Recall that a core investment thesis for Chinese stocks is the underlying mass of humanity. However, Africa’s demographic trend is superior to China in that the continent has a proportionately high share of young adults (ages 15 to 49).
The second factor that specifically benefits Square stock is Africa’s mobile payment opportunity. Currently, most sub-Saharan Africans are unbanked and therefore resolve their debts through cash payments. According to McKinsey & Company, most institutions are “bearing the high cost of cash payments — costs associated with manual acceptance, record keeping, counting, storage, security, and transportation.”
However, approximately 67% of adults in the continental region use mobile phones. Thus, the long-term upside potential for Square stock. With Dorsey’s personal initiative, SQ can get a first-to-market foothold in the African digital payments space. Additionally, both consumers and institutions benefit substantially from the monetary digitalization (i.e., security and cost savings).
From this perspective, it’s only natural that Dorsey plans to telecommute across nine time zones. Although nearer-term challenges exist, the upside potential for SQ stock is too great to ignore.
A Bro Has to Bro
As I mentioned up top, I don’t like CEO bros. And I detest “bro culture.”
You could say that Dorsey is the epitome of this subculture. His “bro-ness” is so extreme that he’s a hybrid chief exec for Square and Twitter. And now, he’s going to perform both duties while playing a digital conquistador in a far off, exotic land.
Yet Dorsey separates himself from the other executive bros because he is among the business world’s top visionaries. Despite criticism, he recognized the value of cryptocurrency integration and acted on it. Today, he’s got his eyes on Africa and for good reason.
NJ Ayuk, leading African energy attorney and author of “Billions at Play,” states that when it comes to international investments in Africa:
“We have China on one side really embracing us and pumping in a lot of money for massive projects … But African nations are becoming better negotiators, and they want to get married. They don’t just want to date. The US is there, but we could see a lot more coming out of these partnerships.”
Put differently, Africa is a willing partner toward digitalization and broader international integration. Yet our own government is slow to respond. Not Dorsey. He’s on it like a corporate tool in a yoga class.
Admittedly, Dorsey could have chosen a better way to announce his intentions. But the man is smart as a whip. He’s the only one I’m truly comfortable calling a bro. Just make sure to own Square stock, not Twitter.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.