Square (SQ) is eying up opportunity in the struggling music biz. Last week, the digital payments specialist announced it is acquiring a majority ownership stake in TIDAL. The Jay-Z owned music-streaming company will cost Square $297 million, in a mix of cash and stock.
Since the hip-hop star and entrepreneur took Tidal under his wing in 2015, the Spotify competitor has failed to gain traction, and the Street’s reaction to the news was decidedly lukewarm.
However, Mizuho analyst Dan Dolev has an upbeat take on the new addition to the fintech star’s arsenal of services.
“We believe that acquiring a majority ownership stake in Jay-Z’s TIDAL platform is an excellent fit for SQ,” Dolev said. “It expands the ecosystem, provides new creativity around Bitcoin uses, boosts engagement and increases Cash App’s buzz.”
Not to mention, there is also a growing convergence between Bitcoin – or more specifically, blockchain – and art. The recent craze for NFTs (non-fungible tokens) – a digital certificate represented by a unique token as proof of ownership of art/IP/or anything that could be tokenized – could open up new commercial possibilities for artists.
For example, the Kings of Leon new album will also be released as a limited edition NFT, and some works of art have been selling for massive amounts.
Square was quick to recognize the potential of Bitcoin, and a big part of its success has been down to the close relationship between the Cash App and the leading cryptocurrency. Dolev thinks Square could once again be at the forefront of a new paradigm.
“SQ is positioning the acquisition as a path for economic empowerment to musicians. But we believe SQ thinks bigger and longer-term, expanding social commerce capabilities and seeing the potential as a first mover in the beleaguered post-COVID music industry as it searches for a new direction,” the analyst summed up.
All in all, Dolev rates SQ shares a Buy, along with a $380 price target. The implication for investors? Upside of 57%. (To watch Dolev’s track record, click here)
While not quite as exuberant as Dolev’s forecast, the Street’s $276.71 average price target suggests gains of 28% could be in the cards over the coming months. The analyst consensus rates Square stock a Moderate Buy, based on 19 Buys, 11 Holds and 2 Sells. (See SQ stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.