Please ensure Javascript is enabled for purposes of website accessibility

Why Square Stock Dropped Today

By Evan Niu, CFA – Jun 24, 2020 at 4:57PM

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

Investors are rattled by a resurgence in coronavirus cases in the U.S.

What happened

Shares of mobile payment processor Square (SQ 1.74%) dropped today, down by 4% at the close, amid a broad market sell-off due to fears about the COVID-19 pandemic. Separately, Square announced a new delivery service and a Wall Street analyst released a bullish research note.

So what

The U.S. is seeing sharp increases in new coronavirus cases in various states around the country. Investors had driven the stock market to new highs on hopes that the worst of the pandemic was in the rearview mirror, but moves to ease lockdown restrictions in order to reopen the economy are contributing to a startling resurgence.

Customer inserting a card into a Square payment processing terminal at a checkout counter while employee holds up a paper bag

Image source: Square.

If additional lockdowns are imposed again in response, Square's merchant base, which includes a lot of small and local businesses, would be adversely impacted. The stock also set fresh all-time highs yesterday, so some investors may be cashing out profits.

Now what

Square also announced a new on-demand delivery service for the Square Online Store in an effort to help merchants transition to online sales and e-commerce. Sellers can dispatch couriers from delivery partners to fulfill online orders. Postmates will be the delivery partner initially, with additional partners expected to join the program soon. Sellers will pay just a flat fee of $1.50 per order to Square in addition to a separate fee to the delivery partner based on distance and other variables.

Deutsche Bank also put out a research note reiterating a buy rating on Square shares and boosting its price target from $80 to $120.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Square and recommends the following options: short September 2020 $70 puts on Square. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Block, Inc. Stock Quote
Block, Inc.
$55.08 (1.74%) $0.94

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.