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Here's Why Square Stock Is Falling Today

By Chris Neiger – Updated Sep 8, 2020 at 2:54PM

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Investors have been cooling to tech shares for the past few trading days.

What happened

Shares of Square (SQ 7.24%) were falling today as investors continued to take their tech stock gains from the past few months. Square's stock fell by as much as 7.5% today, before rebounding slightly. As of 3:17 p.m. EDT, it was down 5%.

So what 

The broader stock market has been volatile over the past few trading days. The S&P 500 is down 6.7% since Sept. 2, with most of the drop coming as some investors have sold their shares in tech stocks.

A red line graph going down.

Image source: Getty Images.

Before the sell-off began last week, technology stocks had fueled a massive stock market rebound after the crash in March. As people began spending more time working from home and avoiding public places because of the coronavirus, investors put a lot of money into companies that make social distancing easier. That means that the stocks of many technology companies have skyrocketed this year. 

That's been true for Square, a payment and point-of-sale solutions company, and investors have pushed up the company's stock 122% year to date.

Now what 

Square investors can likely expect more price swings in the near future, as investors take some of their profits from the past few months. It's unclear how long the current sell-off will affect tech stocks, but investors need to remember that the company's drop doesn't have anything to do with Square's underlying business. The market is simply pulling back from the huge tech stock run-up of the past few months.

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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