Should investors buy the dip in Square's share price?

Should Investors Buy The Dip In Tech Stocks’ Share Prices?

Due to concerns of a pullback in spending, rising Delta variant cases, and Chinese market woes, investors are needlessly selling good stocks.

The stock market is looking a bit like Season 3, Episode 9 of ‘Game of Thrones’ (you should Google that) at the moment, but investors shouldn’t hit the panic button just yet. 

One example at a time of such volatility is Square (NYSE: SQ), which has just seen its products go live in France today.

But why is Square’s share price down today?

The whole market is down, and, in most cases, it’s not necessarily due to any company-specific news. 

Much of this bearish sentiment comes from three key factors:

  • COVID-19 fears, especially with more businesses delaying return to offices and rising Delta variant cases in the U.S. 
  • A two-day Federal Reserve meeting tomorrow to discuss the possibility of slowing down monetary stimulus for the economy — i.e. a spending pullback. 
  • China Evergrande Group, one of the country’s largest property developers, looking like it’s gonna default on its loans — some real 2008 flashback vibes here. 

Square, on the other hand, is actually doing quite well. In its Q2 earnings last month, gross profit soared 91% and EBITDA jumped 268% from the year-ago quarter. Additionally, its total revenue (excluding Bitcoin) was up 87% year-over-year. And now, it is expanding its products into France, the second-largest market in the EU. This marks Square’s third European market entry as it continues to focus on international growth.  

So, Square isn’t the problem, it’s the market. That’s why it is important, as investors, to look deeper than the daily stock price and see if anything has happened to change the intrinsic value of the company. 

Outside forces are playing a large role in moving the market, but as long as you’re long-term buy-and-hold on stocks you’ve properly researched, you need not concern yourself.

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