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.
https://www.fool.com/investing/2021/01/11/should-square-buy-…
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.
https://techcrunch.com/2021/03/04/square-buys-majority-of-ti…
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:
https://investors.squareup.com/news/news-details/2021/Square…
“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…