Square Stock Moves Higher on Tidal Acquisition Rumors

The equity sports an over 273% year-to-date lead

Digital Content Manager
Dec 24, 2020 at 9:51 AM
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Remember Tidal? The music subscription service bought by Jay-Z for a cool $56 million in 2015, that was supposed to usher in a new era of music sharing? Well, it never happened. Tidal was overshadowed by the deeper pockets and better-run streaming names associated with Spotify Technologies (SPOT), Apple (AAPL), and Amazon.com (AMZN). Tidal is back in the news, though, with payments processing company Square Inc (NYSE:SQ) in talks to buy the streaming name. It's a move that could significantly diversity Square's business portfolio, and has the stock up 1.3% at $233.86 this morning.

Despite hitting a three-year-low of $32.33 on March 18, Square stock has resumed its blistering multi-year climb on the charts. The 80-day moving average has been a consistent source of support over the past several months, and year-to-date SQ sports an astounding 268.7% lead. Today's gains have the shares taking aim at their Dec. 22 record high of $243.38.

In trend with what has been the case for years now, analysts remain underwhelmed by SQ. Of the 34 brokerages covering the stock, 15 maintain "hold" or worse ratings.  Meanwhile, the 12-month consensus price target of $204.75 is a hefty 12.4% discount to its current perch. 

Shorts have been building their positions, too, and an unwinding of bearish bets could keep the wind at the equity's back. Short interest rose 3.2% in the last two reporting periods, and the 26.74 million shares sold short already make up a healthy 8% of the stock's available float, or nearly three days' worth of pent-up buying power.

Lastly, the equity's Schaeffer's Volatility Scorecard (SVS) stands at an elevated 93 out of 100. This means SQ has exceeded option traders' volatility expectations during the past year -- a boon for options buyers.

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