Square stock dipped after the digital payment firm said it would acquire a majority stake in music streaming service Tidal for $297 million in cash and stock. Tidal has struggled versus Spotify Technology (SPOT) and Apple (AAPL) but could give the consumer Cash App a marketing boost, analysts say.
Square (SQ) said it does not expect the Tidal financial results to have a material impact on consolidated revenue or gross profit in 2021. The deal is expected to close in the second quarter of 2021.
Tidal’s Shawn “Jay-Z” Carter will join Square’s board of directors. Jay-Z, a rapper and music industry businessman, acquired Tidal for $56 million in early 2015.
In its core business, Square aims to build a two-sided digital payments ecosystem, with products designed for both merchant sellers and consumer buyers. The Square Cash App helps individuals manage money.
Square Stock: Cash App Main Growth Driver
Square stock ended 2020 with 36 million Cash App users, up from 30 million at the end of June and 24 million in December 2019.
The Square Cash app, a peer-to-peer money-transfer service, competes with PayPal Holding‘s (PYPL)’s Venmo, Zelle and others.
Amid the coronavirus emergency, Cash App emerged as a digital alternative to traditional banks. Cash App users are able to buy, hold and sell digital currency Bitcoin.
Also, the Cash App provides a stock trading feature. Cash App offers a debit card through a deal with Marqeta.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.
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