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Why Square's Shares Jumped 15.7% on Tuesday

By Travis Hoium - Mar 24, 2020 at 4:23PM

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Small business loans, which are part of a potential $2 trillion stimulus package, could help Square long term.

What happened 

Shares of payment company Square Inc (SQ -2.64%) jumped as much as 22.2% as Congress pushed forward a $2 trillion stimulus plan. At the market's close, shares were up 15.7% for the day. 

So what

The stimulus being discussed would include funds paid directly to Americans and $500 billion in lending allocated to businesses. Both sides of the stimulus could ultimately help Square long term. 

Person checking out with Square at a bike shop.

Image source: Getty Images.

Broadly, the more money people spend, the larger the pool of transactions there are for businesses who use Square. Even better for the company could be that restaurants and small businesses that use Square could get a lifeline of funding from the government. Those customers are ultimately the ones that drive Square's business long term. 

Now what

There are likely to be ups and downs for Square in the next year, but long term, I still think this is a great technology stock within financial services. Every day it's improving offerings to small companies that both grow their businesses and increase fees for Square. Even if some of those customers go out of business, new businesses formed are more likely to use electronic platforms like Square. That will keep the company growing. 

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