{"id":483305,"date":"2021-09-01T04:32:22","date_gmt":"2021-09-01T08:32:22","guid":{"rendered":"https:\/\/financhill.com\/blog\/?p=483305"},"modified":"2021-08-19T11:02:17","modified_gmt":"2021-08-19T15:02:17","slug":"square-stock-vs-spotify","status":"publish","type":"post","link":"https:\/\/financhill.com\/blog\/investing\/square-stock-vs-spotify","title":{"rendered":"Square Stock vs Spotify: Which Is Best?"},"content":{"rendered":"<p><strong>Twitter Inc (<a href=\"https:\/\/financhill.com\/search\/valuation\/TWTR\">NYSE:TWTR<\/a><\/strong><span style=\"font-weight: 400;\"><strong>)<\/strong> CEO Jack Dorsey\u2019s <strong>Square Inc (<\/strong><\/span><strong><a href=\"https:\/\/financhill.com\/search\/valuation\/SQ\">NYSE:SQ<\/a><\/strong><span style=\"font-weight: 400;\"><strong>)<\/strong> bought <\/span><a href=\"https:\/\/www.vox.com\/recode\/22313268\/tidal-square-jay-z-jack-dorsey-nft-explainer\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">Jay-Z\u2019s Tidal music service<\/span><\/a><span style=\"font-weight: 400;\"> in 2021. It prompted a lot of speculation as to what Square might be planning. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">Many believe it could be related to NFTs or tie in with Twitter Spaces, a social audio rival to Greenroom from <strong>Spotify Technology SA (<\/strong><\/span><strong><a href=\"https:\/\/financhill.com\/search\/valuation\/SPOT\">NYSE:SPOT<\/a><\/strong><span style=\"font-weight: 400;\"><strong>)<\/strong>.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Jay-Z and Dorsey <\/span><a href=\"https:\/\/variety.com\/2021\/digital\/news\/jay-z-jack-dorsey-talk-tidal-plans-1235006917\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">fanned those flames with a Space<\/span><\/a><span style=\"font-weight: 400;\"> discussing future plans and Hova\u2019s seat on the Square board. Tidal was marketed as a high-fidelity streaming service that pays artists more while giving fans better audio quality than Spotify offers.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/SQ?defaultOverlays=SMA20%2CSMA200&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">If Square fully embraces the move to audio it has a giant to contend with: Spotify. How do they compare?<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One is a financial technology company that offers a wide variety of payment services \u2013 the other is a streaming service trying to convince its users to socialize more. Square&#8217;s purchase hints at direct competition heating up soon.<\/span><\/p>\n<h2><b>The Rise Of Square: St Louis to San Francisco<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Square was founded in Saint Louis, Missouri by Dorsey, Jim McKelvey, and Tristan O\u2019Tierney in May 2010. Soon it relocated to its current headquarters in San Francisco.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"> Square&#8217;s mobile card reader transforms any mobile device into a credit card reader and allows small businesses and solopreneurs a wide array of mobile point-of-sale (POS) options.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This initial success of the Square Reader enabled the company to expand its offerings while disrupting traditional banking services. The company soon offered payroll, gift card processing, loans through Square Capital, and Cash App, which blew up to <a href=\"https:\/\/www.statista.com\/topics\/3242\/square\/\" target=\"_blank\" rel=\"noopener\">over 36 million customers<\/a> by the end of 2020.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/fundamentals\/SQ?defaultTimespan=quarter&amp;defaultType=earnings\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">It also owns Weebly, a web-hosting service that makes out-the-box ecommerce easy.&nbsp;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">With a focus in payments, it seems odd that the company would spend $297 million in cash and stock (as well as giving up a board seat) to buy Tidal. The move has analysts wondering about its future prospects with the failed streaming service.<\/span><\/p>\n<h2><b>Why Did Square Buy Tidal?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\"><strong>When explaining the Tidal acquisition, Dorsey stated that it\u2019s meant to find new ways for artists to make money<\/strong>. Of course, that was the original goal of the company when Jay-Z and his artist collective bought it in the first place. And it never paid much money to artists because it never attracted a very large user base.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It\u2019s available in 61 countries, but the company reportedly has between 3 and 5 million users, although the exact number isn\u2019t public.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because of Square\u2019s expansive financial offerings, it\u2019s hoping to be a new type of record label for musicians. And that\u2019s not far off from the reality that rivals like <strong>Spotify (<a href=\"https:\/\/financhill.com\/stocks\/nyse\/spot\">SPOT<\/a>)<\/strong>, Clubhouse, and even <strong>Facebook (<a href=\"https:\/\/financhill.com\/stocks\/sp500\/fb\">FB<\/a>)<\/strong> is aiming for. Over the next decade, we\u2019re likely to see legacy music and movie labels replaced by tech platforms, but Tidal isn\u2019t guaranteed success.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/FB?defaultOverlays=SMA20%2CSMA200&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<h2><b>Square Has Already Grown 25x<\/b><\/h2>\n<p><span style=\"font-weight: 400;\"><strong>Square (<a href=\"https:\/\/financhill.com\/stock-price-chart\/sq-technical-analysis\">SQ<\/a>)<\/strong> is a formidable investment that grew from around a $10 trading range in 2016 to over $250 per share in 2021. The company grew to over $125 billion in market capitalization after its <\/span><a href=\"https:\/\/squareup.com\/us\/en\/press\/square-announces-plans-to-acquire-afterpay\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">$29 billion acquisition of Afterpay<\/span><\/a><span style=\"font-weight: 400;\">, a fintech company that pioneered \u201cbuy now, pay later\u201d POS lending.<\/span><\/p>\n<p><strong>Its <a href=\"https:\/\/s27.q4cdn.com\/311240100\/files\/doc_financials\/2021\/q2\/Q2-2021-Shareholder-Letter.pdf\" target=\"_blank\" rel=\"noopener\">second quarter earnings statement<\/a><\/strong><span style=\"font-weight: 400;\"><strong> showed 91 percent year-over-year increase in gross profit at $1.14 billion. And this doesn\u2019t include its investment in bitcoin.<\/strong> The company is heavily investing in its network and product ecosystem to empower businesses to transact seamlessly.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/stock-score\/SQ?periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"500\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">Both its seller tools and peer-to-peer consumer payment app grew, making the company both a pandemic and recovery play. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">However, it\u2019s unclear whether the company can meet its lofty growth projections in a crowded field that includes the likes of <strong>PayPal Holdings Inc (<\/strong><\/span><strong><a href=\"https:\/\/financhill.com\/search\/valuation\/pypl\">NASDAQ:PYPL<\/a><\/strong><span style=\"font-weight: 400;\"><strong>)<\/strong> and legacy banks.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/PYPL?defaultOverlays=SMA20%2CSMA200&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<h2><b>Is Spotify Better Than Tidal?<\/b><\/h2>\n<p><strong>Tidal has a massive library of over 70 million songs that play at 320 KBPS in the $9.99 per month Premium tier and 1141 KBPS in its $19.99 per month HiFi tier. The company\u2019s standout exclusive album is Beyonce\u2019s <i>Lemonade<\/i><\/strong><span style=\"font-weight: 400;\"><strong>, which is both an audio and visual album.<\/strong> It does have exclusive video content and in-person music events though.<\/span><\/p>\n<p><span style=\"font-weight: 400;\"><strong>Spotify, on the other hand, has the same music being streamed to a much larger user base of over 165 million premium subscribers<\/strong>. While it may be lower quality audio at a max of 320 KBPS, it also spent over $1 billion on exclusive podcasts, like Joe Rogan Experience, Call Her Daddy, and the Gimlet Media podcast network.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This mimics Netflix\u2019s video streaming business model, where it brought talent in-house to minimize licensing payments. Despite these advantages, the company\u2019s stock plummeted during its most recent earnings report.<\/span><\/p>\n<h2><b>Why Is Spotify Stock Down?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\"><strong>Spotify (<a href=\"https:\/\/financhill.com\/stock-forecast\/spot-stock-prediction\">SPOT<\/a>)<\/strong> exceeded Wall Street expectations in its <\/span><a href=\"https:\/\/investors.spotify.com\/home\/default.aspx\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">second quarter earnings report<\/span><\/a><span style=\"font-weight: 400;\">. It expanded its service to 80 new markets in the quarter, while $2.75 billion in total sales is a 23 percent increase from the prior year\u2019s period. And net losses shrank from $2.26 to $0.22 per diluted share.<\/span><\/p>\n<p><iframe loading=\"lazy\" style=\"margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/widget\/charts\/SPOT?defaultOverlays=SMA20%2CSMA200&amp;periodGrouping=daily&amp;defaultSeries=candlesticks\" width=\"720\" height=\"400\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n<p><span style=\"font-weight: 400;\">However, user growth slowed during the year, leading many bearish analysts to abandon the stock. It was caused by a temporary technical glitch, but some investors are no longer convinced the company\u2019s in-house podcasting strategy will pay off in the long run.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Bullish analysts believe Spotify is undervalued, and it has a median price target of nearly $300 per share. This represents double-digit growth if it can regain investor confidence by year end.<\/span><\/p>\n<h2><b>Square Stock vs Spotify: The Bottom Line<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Square made the move into streaming audio when it bought Tidal in 2021. The music streaming service has exclusive video content and high-fidelity audio that can\u2019t be found anywhere else. However, it still lags Spotify in the audio streaming wars.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Spotify is following the Netflix model to bring content in-house and stop spending so much overhead costs on licensing. It\u2019s investing in podcasters through its Greenroom app to remove the middleman and keep talent working under its banner.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">But Square\u2019s Tidal could be a prime partnership for Twitter Spaces, another Dorsey-owned company.&nbsp;<\/span><\/p>\n<p><iframe style=\"width: 100%; height: 418px; margin: 0 auto; border: 0;\" src=\"https:\/\/financhill.com\/valuation\/SPOT\" frameborder=\"0\" scrolling=\"no\" seamless=\"\"><\/iframe><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Twitter Inc (NYSE:TWTR) CEO Jack Dorsey\u2019s Square Inc (NYSE:SQ) bought Jay-Z\u2019s Tidal music service in 2021. It prompted a lot of speculation as to what Square might be planning. Many believe it could be related to NFTs or tie in with Twitter Spaces, a social audio rival to Greenroom from Spotify Technology SA (NYSE:SPOT). Jay-Z [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":483310,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[22],"tags":[],"class_list":["post-483305","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investing"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/financhill.com\/blog\/wp-content\/uploads\/2021\/09\/Untitled-design-86.jpg","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9czeV-21Jf","_links":{"self":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/483305","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/comments?post=483305"}],"version-history":[{"count":10,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/483305\/revisions"}],"predecessor-version":[{"id":483323,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/posts\/483305\/revisions\/483323"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media\/483310"}],"wp:attachment":[{"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/media?parent=483305"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/categories?post=483305"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/financhill.com\/blog\/wp-json\/wp\/v2\/tags?post=483305"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}