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Here's Why Square's Stock Price Rose Today

By Chris Neiger – Jul 20, 2020 at 4:24PM

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Investors likely believe the fintech company will benefit from its ability to help businesses weather the current economic storm.

What happened

Square's (SQ 3.32%) stock rose Monday as investors put their money into tech stocks as a strategy to ride out the rising coronavirus wave that has taken hold across most of the U.S. The fintech company closed the trading day up 6.4%.

So what

As the COVID-19 pandemic has continued to hit new peaks in states across the country, many investors have put their money into technology companies that are focused on helping businesses expand their e-commerce opportunities. Square's platform makes it easy for businesses of all sizes to set up online shops and process digital transactions. 

A white line graph on a dark blue background.

Image source: Getty Images.

With concerns rising and some states already walking back their  economic reopenings, investors are looking to Square and other similar technology companies to keep certain parts of the economy up and running. 

That positive sentiment has helped push Square's stock up 86% over the past six months, compared to the S&P 500, which ended the trading day down 2.6% over the same period.

Now what 

Square's share price gains Monday didn't come from any company-specific news -- a common situation among stocks since the coronavirus began to make its presence felt in the U.S. While the gains are great for shareholders, investors should also recognize that many stocks have been extremely volatile during the pandemic. Additionally, the U.S. economy has a long road ahead before it can hope to fully recover from the economic effects of the pandemic. All of which means investors should keep a long-term perspective about the companies in their portfolios.

Chris Neiger 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.

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