What happened
Shares of Square (SQ 1.02%), a digital payments company, fell today after the price of bitcoin plunged.
The tech stock was down by as much 6.3% today and was down by 5.3% as of 2:57 p.m. EST.
So what
Square's Cash App is a popular way for users to make peer-to-peer payments, but it's also used to buy and sell bitcoin. As the price of bitcoin tumbled to below $32,300 today -- down from $41,800 on Friday -- investors appeared to flee Square's stock.
Image source: Getty Images.
Investors may fear that a major pullback on the bitcoin price could lead to less buying and selling of the cryptocurrency on Square's Cash App, which could, in turn, lead to less revenue for the company.
The Cash App had 30 million active users at the end of the third quarter (reported on Nov. 5), though not all of them use the app for bitcoin purchases. Square generated $1.63 billion in revenue from bitcoin in the third quarter, a massive 1,000% jump from the year-ago quarter.
Now what
Today's share price slide hardly makes a dent in the company's 12-month gains, which are still up 236%. Still, Square investors should keep in mind that while bitcoin's price certainly has an influence over the company's stock, bitcoin represents only a portion of the company's overall business.
