WHY? Square to buy Tidal

So, the shocking part of this news is that a FinTech (just got banking rights) is buying a (failing?) hip hop music streaming service…AND…JayZ is going to be on the board??

I have been trying to find any background on this to counter my knee-jerk response of “WTH?”

Motley Fool had a post in Jan about the rumor - They mention that Cash App has some ties to the hip hop world and has been marketing its services to those customers. But that is a FAR cry from running a streaming service and managing artists.

TechCrunch has an article that provides a double edged sword here. One edge, Square is buying a majority stake, but letting the artists keep all of their investments in the company, so not actually getting something they could fully integrate. Second edge, Square is letting the artists keep their investments so they “could” be getting a very influential group of brand ambassadors for Square services.

There appears to be no flat out support for this move. What I am finding seems to be all hopeful ideas.

That is very specifically against Sauldom wisdom, do not bet on the turn around or possibility of a bright future.

So, does this purchase significantly change the investment thesis in SQ the FinTech? The price is ‘relatively’ low but what does that really mean? I find no information on how much audience is really in Tidal. For the low price, how much of SQ time and research investment will go into this section? With Jay-Z getting a board seat, that seems like too much business time will be devoted to this purchase.

Here is Square’s news post on this:

“TIDAL will operate independently within Square, alongside the Seller and Cash App ecosystems.”

"The acquisition extends Square’s purpose of economic empowerment to a new vertical: musicians. Artists are entrepreneurs with a dream and deserve access to systems, tools, and financial freedom to reach those dreams at every stage in their career. "

This sounds nice, hints at a way that Square could ‘learn’ how the industry works? So like learning how restaurants work, or how conventioneers work…then you get their business.

The last part of the article says “Based on current information, Square does not expect TIDAL’s financial results to have a material impact on Square’s consolidated revenue or gross profit in 2021.” That means there isn’t any business reason to do this? That doesn’t seem very shareholder friendly.

At this moment, my conviction on this stock is dropping. It was about to move up to my highest conviction due to the banking, but my gut doesn’t like companies that specifically go after philanthropic moves that do not add to the business…


If you want to look for an analog you can look no further than Will I Am of the Black Eyed Peas getting appointed as Chief Creative Officer of 3D Systems. I believe this was within a whisker of its all time high, never to be seen again.

FWIW the fundamentals of Square and 3D Systems are completely different.


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I honestly wouldn’t be surprised if this deal by Dorsey is no more then a vanity play and a gift so he can hang out with his buddy JZ and the elite world of mega stars here in Los Angeles.

Other then that it seems absolutely crazy to me. Not that buying a company that has absolutely nothing to do with your company at all isn’t kind of crazy. The elite world of the powerful egos hanging out together in their compounds up in the Hollywood Hills as if they are looking down on a Monopoly Board and deciding to by Park Place.



Why do we care?

  1. The purchase (or partnership or whatever it is) has no ‘material’ effect on Square, by your own quote.
  2. If something works, it will show up in the performance of Square.

Worrying about whether Jack Dorsey wants to ‘hang’ with rappers and hip-hoppers is really quite meaningless. Seems like a relatively cheap “option” for a business that is increasingly predicated on being/becoming/staying a “ubiquitous app”…


I have been trying to find any background on this to counter my knee-jerk response of “WTH?”

I honestly wouldn’t be surprised if this deal by Dorsey is no more then a vanity play and a gift so he can hang out with his buddy JZ and the elite world of mega stars here in Los Angeles.

I see this as an approach from Dorsey to continue working on creating a “SuperApp,” such as WeChat in China, Rappi in LatAm, or Grab in SE Asia.

Dan Schulman (PayPal CEO) recently articulated his company’s ambitions to build a Super App. On slide 8 on this year’s investor day presentation, he highlighted how they’re building “a comprehensive platform to power the global digital economy.” He then indicated how Paypal is “starting to build the digital wallet into a Super App that transcends across payments commerce and financial services, all of that on a common platform.”

With 36M+ MAUs at Square, I think this is a step into an ambition to offer users services outside of the financial scope. With payments, commerce, and financial services already available in the platform – this opens an array of opportunities that can minimize users to having a music app on their phone.

Given the cheap acquisition price, I think this offers Square interesting optionality. Although its scope may be starting to lay somewhat outside of the scope of this board – I’m looking forward to seeing how Square and Paypal battle to create the Super App of Northamerica.

Paypal Investor Day presentation: https://s1.q4cdn.com/633035571/files/doc_presentations/2021/…

Protect the identity of this board and maximize your learning by reading https://discussion.fool.com/for-board-newcomers-all-others-34765…… before participating


Back in December, when I first heard about the potential acquisition, I had the same thoughts… but after reading some I became aware of some synergies.

Copy/paste below from an article (https://trapital.co/2020/12/28/memo-21-when-jack-gets-paid-d…)

Tidal is more than a music streaming service. It’s a content distributor that hosts music, podcasts, interviews, and livestream events. Cash App’s hip-hop loving customers already enjoy the content on the platform. Square can use Tidal’s existing and new content to attract more customers to Cash App. For instance, Meg Thee Stallion has recently given away free Bitcoin. She could hosts livestream Cash App concerts via Tidal and give away a certain amount to a set number of fans.

Tidal can also offer free cash or Bitcoin to attract new customers. Cash App is the primary sponsor of one of the most popular hip-hop podcasts—The Joe Budden Podcast. The Tidal acquisition is a deeper step toward using hip-hop content to drive its growth.

It goes back to Jeff Bezos’ quote <https://www.vox.com/2016/5/31/11826166/jeff-bezos-amazon-pri… on Amazon’s Prime Video strategy. “When we win a Golden Globe, it helps us sell more shoes.” Those who stream Amazon video convert from free Prime trials at higher rates and buy more goods from Amazon. Similarly, those Cash App customers who use Tidal may be more valuable than others. There’s a path for Tidal to create inexpensive content that can further grow its user base.

Square’s Seller services have many tools for artists to run their commerce operations. Tidal would give Square a platform for artists to share their content (music, podcasts, livestream) within the company. This is similar to the creator playbook that SoundCloud is now running, which led to its first profitable quarter ever <https://www.musicbusinessworldwide.com/soundcloud-revenues-s… in Q3’20.

If Square is an early part of these artists’ careers, they might be more likely to become powerful Cash App influencers as their careers get bigger. Shopify PM Donald Richard <https://twitter.com/DonaldRichard/status/1342192180136443905… has a great thread on this.


How much do you suppose it’s worth to have a bunch of celebrities posting about Square’s services on social media? If Square is trying to become a bank and trying to pick up younger users (many of whom likely have no bank at all) it wouldn’t be the worst idea to have a partnership with a lot of famous people.

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I agree with you RMTZP:

To me this is a Crytocurrency/NFT play and aligns with Square’s long-term plans related to crypto assets.



My comment must have not been blunt enough!

Saul’s board is about known, proven results – primarily known, proven hypergrowth. Speculation and armchair-CEO comments should happen on the other boards…


The market cap today of SQ is $100 Billion. The cost of the acquisition is $300 Million = 1/3 of 1% of its market cap. SQ wants everyone to be using their little credit card device and banking with them. This seems like a way to build a higher profile and market their mainline business in a new business area.

I recall Peter Lynch’s notion of “di-worsification” to describe the diversification of companies with one area of expertise spending a ton buying companies completely out of their worlds. I don’t think this is that, at least not yet.

If they lose focus with another 20 purchases of “not-very-adjacent” companies, it would be more concerning.


There’s an interesting discussion about this acquisition on the Market Foolery podcast yesterday.
I certainly was not in favor of this music industry alliance as it reminds me of my scars from my DDD holding, but they provide an interesting perspective