Why Square, Inc. Stock Climbed 10% in September

Published October 02, 2017
Motley Fool

What happened

Shares of financial technology company Square (NYSE: SQ) increased 10.3% during September, according to data provided by S&P Global Market Intelligence. At least some of this rise can likely be attributed to the surprising news of Square's application to form a wholly owned bank, the company's recruitment of Intel's VP and general manager of artificial intelligence products to its board of directors, and a new strategic partnership with Eventbrite. 

So what

Square's move to launch its own wholly owned bank put the spotlight on the company's growing ambitions to offer a full suite of banking solutions. Furthermore, it highlights Square's desire to continue to develop its fast-growing loan business. Square's second-quarter loan volume was up 68% year over year. 

In addition, Square's new board member, Naveen Rao, showed investors how seriously the company is taking artificial intelligence.

"Machine learning and deep learning are crucial to our continued innovation and growth," Square CEO Jack Dorsey said in a press release. "Naveen's expertise will be hugely helpful to Square as we continue to integrate these technologies into every aspect of our business to ultimately better serve our customers."

Finally, Square's partnership with live event technology platform Eventbrite gives Square inroads for the payment processing of a fast-growing customer. The strategic partnership also includes a $25 million investment in the promising event technology platform.

Now what

Looking ahead, investors should look to see how all three of these potential catalysts will impact Square's business.

In particular, Square's commitment to artificial intelligence with its new board member, combined with the company's culture of innovation, could give Square an edge in the financial technology sector. As Rao said in Square's press release, he wants to help "accelerate the company's use of AI and leverage this work to expand access to the economy."

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Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of Square. The Motley Fool recommends Intel. The Motley Fool has a disclosure policy.