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Stock Analyst Update

Square to Buy Majority of Tidal; Jay-Z to Join Board

We think much of Cash App’s recent success has come from Square’s efforts to build out ancillary services on the platform, and this could provide another tie-in.


Narrow-moat Square (SQ) announced that it will buy a majority stake in music platform Tidal for $297 million in cash and stock. As part of the deal, Tidal board member and shareholder Jay-Z is expected to join Square’s board. We think much of Cash App’s recent success has come from Square’s efforts to build out ancillary services on the platform, and this could provide another tie-in. However, in this case, the strategic connection seems fairly weak, and Tidal is expected to continue to operate independently. Square's comments on the deal suggest that the acquisition will provide a further entry point to serve the music industry, so there could be some opportunities on the acquiring side as well. Still, the deal is much too small to have a material impact on our $78 fair value estimate, which we will maintain. 

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Brett Horn does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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