What happened
The stock market was having a so-so day on Tuesday, with most major indexes flat or slightly in the red at midday. However, fintech giant Square (SQ -2.94%) was a big underperformer. As of 1 p.m. EST, Square had dropped by nearly 6% for the day, adding to a string of recent pullbacks in the stock.
So what
There doesn't seem to be any company-specific news driving Square's stock price lower. Rather, this seems to be a continuation of a steady sell-off following a massive rally. Since peaking at more than $243 per share about a week ago, Square has lost about 14% of its value.
It's also worth noting that there has been a steady rotation out of "stay-at-home" stocks and into "reopening" stocks recently, and the passage of the $900 billion stimulus bill added fuel to that fire. While I wouldn't put Square entirely in the stay-at-home category, with Cash App users doubling over the past year, it's fair to say Square certainly received a tailwind from the pandemic. Investors could be taking profits and rotating their capital into stocks that have more to gain from the economy reopening.
Image source: Square.
Now what
It's worth mentioning that even after today's pullback, Square is still up by more than 235% in 2020, which further supports the premise that the negative price action of the past few days is merely a "cooling off" of an extremely hot stock.
