On Dec. 1, fintech company Square changed its name to Block (SQ 2.55%) to better reflect the evolution of its business. In this video from Motley Fool Backstage Pass, recorded on Dec. 8, Fool analyst Eric Bleeker asked contributor Jon Quast what he thought of the move. And as we'll see, Jon's a big fan because it demonstrates Block's persistence in finding new ways to grow its business.
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Eric Bleeker: First new story. I'm going to kick this over to Jon first because I was on Jon's Twitter profile today, and I noticed his No. 1 holding as of the end of November is Square, which is now Block. Square changed its corporate name to Block to better reflect a focus on, not only crypto, but a variety of business lines. In addition to that, Jack Dorsey, the CEO who had been splitting duties with Twitter, is stepping down from his Twitter role to focus full time on Block.
Jon, Square is one of my largest holdings as well. It's off 34% from 52-week highs. When you look at this deal, what do you think about Square and how interesting it should be to investors today?
Jon Quast: Well, yeah, Eric. You bring up an interesting fact that Square is my largest holding, and that's partly a function because of when I bought it. I purchased my largest position in it during the crash of 2020 so I definitely got a good price. The reason I bought Square stock, though, besides the ongoing transformation that's happening from physical cash to digital cash, I think that is the secular trend that's driving this train. But on top of that, I like Square in particular because of its optionality. It's continually launching different products and services to better grow its business. This name change with Square is really indicative of that kind of a culture that is focused on optionality.
So what they're saying here is that Square when it started was a little hardware device. It was physically a square, and it was a card reader. This was so that merchants who are underserved could be able to easily join credit card payments and digitize their business. Over time, the Cash App side of their business has grown to be on par with that Seller ecosystem. So what they're saying here is by changing the name to Block, what was their Seller ecosystem is now going to be renamed Square. Reflecting that traditional how that whole merchant side of the business got started, Cash App is still going to be its own ecosystem, more of the consumer side of the business. But now we're also going to have two other, right now, ecosystems in the whole Block parent umbrella, which is going to be Tidal, which is the company that they just acquired that is the music company, but also Spiral. And Spiral is going to be the cryptocurrency ecosystem is what they're calling its side of the business.
To me, the name change I'm neither here nor there. To me, it's in the headlines. I don't know how much advantage it gives Square necessarily to change its name to Block. But what it is, is indicative of a culture that is focused on optionality, and that part I do very much like.