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Re-Branded Square Will Be Different but Still Compelling
Stock Analysis & Ideas

Re-Branded Square Will Be Different but Still Compelling

Based in California, Square (SQ) develops hardware and software focused mainly on facilitating digital point-of-sale payments. I am bullish on the stock. (See Analysts’ Top Stocks on TipRanks)

That description of Square, while accurate at the moment, is set to change dramatically in the near future.

So, if you’ve been a long-time investor in Square, don’t just consider it a set-it-and-forget-it holding. Soon, you’ll have a stake in a very different business, and you should “know what you own,” as the old saying goes.

Don’t be too alarmed, but definitely stay informed. After discovering Square’s new direction, you might be more convinced than ever that it’s a company worth investing in.

A Quick Look at SQ Stock

When a stock drops below an established support level, is it bullish or bearish?

That’s an ongoing debate among market technicians, and it’s highly relevant to SQ stock today.

Throughout 2021, the stock bounced cleanly off the $200 support level. This provided confidence to traders who wanted to buy SQ stock at that price point.

Yet, we must remember that support levels aren’t made of steel. A stock can always break below a level unless it’s zero.

Incidentally, there’s also strong resistance for SQ stock at around $270. Multiple times this year, the stock rose to that level but was then harshly rejected.

Recently, SQ’s share price plunged below $200 and almost reached $170. Cautious traders might choose to wait until the selling pressure subsides before taking a long position.

No matter where you choose to start accumulating the shares, it’s fine to take profits at $270, as that would represent a substantial return on investment.

Dorsey’s Big Announcement

In case you didn’t get the memo, Jack Dorsey recently resigned as the CEO of Twitter (TWTR).

Apparently, Dorsey’s stated reason for leaving Twitter was that “founder leaders” ultimately have a responsibility to step down.

However, he’ll remain the CEO of Square, a company that he also founded.

The transition might not be as abrupt as it seems, as Dorsey plans to stay on Twitter’s board until his term expires in mid-2022.

Let’s not beat around the bush, though – the whole situation is startling, as Dorsey was Twitter’s figurehead and champion from the beginning.

While it’s all rather sudden, this event should be bullish for Square. It’s no secret that Dorsey is a fan of cryptocurrency and the blockchain, and Square will provide him leeway to pursue his crypto-centered ambitions.

As evidence of this, Square has accepted Bitcoin payments through the company’s Cash App since 2018.

Dorsey on the Block

In case the changes mentioned above weren’t enough, here are a few more.

Reportedly, Square plans to change its corporate name to Block. Furthermore, the company will change the Square Crypto division’s name to Spiral.

Those two changes are set to take place very soon – on December 10, to be exact.

It’s not difficult to figure out that the Block name refers to the blockchain. Hence, don’t be surprised if Square/Block’s future involves more significant investment and involvement in digital currency.

There’s plenty of room for Square/Block to advance its business in that direction. The company’s Bitcoin business has gross profit margins of only around 2%, so that figure can easily grow in 2022.

Also, don’t be too shocked if Square/Block transforms from a competitor in the point-of-sale payments space to a serious contender in the metaverse.

After all, that’s where the next generation of blockchain-built business is likely to be found.

Next year and beyond, the blockchain won’t be limited to a digital ledger where cryptocurrency transactions are recorded.

Instead, it will be intimately involved with augmented and virtual reality and live-streaming events. Of course, Dorsey is acutely aware of this and will very likely involve these factors in the re-branded Square/Block.

Wall Street’s Take

Turning to Wall Street, SQ earns a Strong Buy consensus rating based on 17 Buys and five Hold ratings. The average Square price target is $304.38, implying 61.4% upside potential.

The Takeaway

If you’re not prepared to have greater exposure to cryptocurrency, the blockchain, and the metaverse, then SQ stock might not be right for you.

On the other hand, if you’re on board with Dorsey’s vision for a dramatically different Square/Block, then feel free to consider an investment.

One thing’s for sure: there will be more changes coming, so stay tuned for more new and exciting developments with this rapidly evolving, blockchain-bound business.

Disclosure: At the time of publication, David Moadel did not have a position in any of the securities mentioned in this article.

Disclaimer: The information contained in this article represents the views and opinion of the writer only, and not the views or opinion of TipRanks or its affiliates  Read full disclaimer >

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