Here's why Square is down today while the stock market is rising

There are two factors weighing on the fintech giant's stock price.

| More on:
woman in jewellery shop paying through paypal

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

The stock market is having a fairly strong day on Thursday after a multiday slump caused by renewed COVID-19 fears. At 10:20 a.m. ET, the S&P 500 index was higher by about 0.6%. However, not all stocks were having a good day. Fintech giant Square (NYSE: SQ) was a major underperformer, its shares having declined by about 3.5%.

So what

There are two likely explanations for Square's underperformance. First, it's worth noting that the tech sector is one of the worst performers of the day. The tech-heavy Nasdaq is hovering around the flatline. So some of the underperformance can be attributed to sector weakness.

Second, and most significantly, Square announced on Wednesday afternoon that it is changing the company's name to Block, effective Dec. 10. Once the change happens, the ticker symbol (SQ) will not change, and the seller business will retain the Square brand name.

Why is Square changing its name? The short answer is that it's because Square's offerings today are very different from the small business financial solutions on which the business was founded. Cash App and the TIDAL music platform are two examples. Block is intended to represent Square's vision for the future -- the company represents its different businesses as "building blocks," and is also making a reference to blockchain, which is a major focus of co-founder and CEO Jack Dorsey.

It's also worth noting that Square Crypto is changing its name to Spiral at the same time, a move designed to give the business its own unique identity within the company's ecosystem.

Now what

The name change comes just days after Dorsey decided to step down from Twitter (NYSE: TWTR) and focus exclusively on Square. And based on today's move, it doesn't seem investors know quite what to make of it. It remains to be seen how much Square's business focus will shift toward blockchain and other new efforts, but for now this appears to simply be a name change, like the one Google made when it became Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL)

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Matthew Frankel, CFP® owns shares of Square. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares) and Square. The Motley Fool Australia has recommended Alphabet (A shares) and Alphabet (C shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on International Stock News

Woman and man calculating a dividend yield.
International Stock News

Prediction: This could be Meta's next big move (and it may happen on July 30)

My prediction is this could be the tech giant's next major move.

Read more »

A tech worker wearing a mask holds a computer chip.
International Stock News

Nvidia chips are flowing to China again — what that means for AI adoption trends

The U.S. government just changed its rules to allow Nvidia to ship its H2O chips to China.

Read more »

Green apple with US hundred dollar bill printed on it.
International Stock News

Should you buy or sell Apple stock before July 31? The answer may surprise you

The technology giant now has a market cap of $3.1 trillion.

Read more »

Woman and man calculating a dividend yield.
International Stock News

Is Nvidia stock a buy now?

Here's a look at whether it's too late to buy the first $4 trillion company.

Read more »

Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.
International Stock News

This trillion-dollar artificial intelligence (AI) stock could double your money in 5 years

The tech leader is making moves, and if enough things go right, these initiatives could lead to superior returns in…

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
International Stock News

Should you buy Nvidia before Aug. 27?

Nvidia reached a record high recently, and its market value soared to $4 trillion.

Read more »

A woman in jeans and a casual jumper leans on her car and looks seriously at her mobile phone while her vehicle is charged at an electic vehicle recharging station.
International Stock News

Should You Sell These 2 Popular "Magnificent Seven" Stocks Before They Report Earnings?

Investors are on high alert as these stocks prepare to report second-quarter earnings.

Read more »

A smiling woman holds a Facebook like sign above her head.
International Stock News

Prediction: This Artificial Intelligence (AI) Stock Could Hit a $2 Trillion Valuation by July 31

Meta Platforms' recent rally has brought its market cap close to the $2 trillion mark.

Read more »