Shares of Square (SQ) are slipping on Thursday after Jack Dorsey's payments company said it is renaming itself Block as it expands its reach to other areas such as blockchain. As part of the rebranding move, the separate part of the company focused on Bitcoin, Square Crypto, will also change its name to Spiral. Bank of America analyst Jason Kupferberg views the move as analogous to those done by other tech companies such as Alphabet and Meta.
FROM SQUARE TO BLOCK: Square has announced that it is changing its name to Block, which will be the name for the company as a corporate entity. "The Square name has become synonymous with the company's Seller business, which provides an integrated ecosystem of commerce solutions, business software, and banking services for sellers, and this move allows the Seller business to own the Square brand it was built for," the company explained. "The change to Block acknowledges the company's growth. […] Block is an overarching ecosystem of many businesses united by their purpose of economic empowerment, and serves many people-individuals, artists, fans, developers, and sellers," the company said in a statement. The legal name "Square, Inc." is expected to be legally changed to "Block, Inc." on or about December 10. The company's NYSE ticker symbol (SQ) will not change at this time.
Additionally, Square also said that, "The name change to Block distinguishes the corporate entity from its businesses, or building blocks. There will be no organizational changes, and Square, Cash App, TIDAL, and TBD54566975 will continue to maintain their respective brands. A foundational workforce, which includes teams such as Counsel, People, and Finance, will continue to help guide the ecosystem at the corporate level. As a result of the name change, Square Crypto, a separate initiative of the company dedicated to advancing Bitcoin, will change its name to Spiral."
Following the announcement, BTIG analyst Mark Palmer noted that while that was the only reference to blockchain in the company's press release, he believes the change will be interpreted by many observers as an indication that the company will be leaning further into its initiatives focused on crypto and decentralized ledger technology. Palmer has a Buy rating and a price target of $320 on Square's shares.
Also commenting on the news, Bank of America analyst Jason Kupferberg, who has a Neutral rating on Square, said that given that there will be no organizational changes, he views the move as analogous to those done by other tech companies such as Alphabet and Meta.
The Fly notes that Square's move to rebrand itself comes about a month after Facebook changed its name to Meta to align itself with Mark Zuckerberg's plan to build a virtual world called the metaverse. While the latter had also decided to change its Class A common stock ticker symbol to (MVRS), it has since announced its decision to postpone the ticker change until the first quarter of 2022. In the interim, Meta's Class A common stock will continue to be listed on Nasdaq under the ticker symbol (FB), which has been used since the company's initial public offering in 2012. Six years ago, Google made a similar move by renaming itself Alphabet (GOOG; GOOGL).
WHAT'S NOTABLE: Afterpay (AFTPF) has announced that, because the condition related to the prior non-opposition of the Bank of Spain remains outstanding, it will postpone the meeting of its shareholders to consider and vote upon a resolution to approve the takeover by Square, which had been scheduled for December 6. Afterpay and Square are considering options to proceed with a scheme meeting before the end of 2021, notwithstanding the fact that the condition related to the prior non-opposition of the Bank of Spain will not likely be satisfied prior to that time, Square disclosed in a regulatory filing. "If Afterpay and Square determine that this is not possible, it is likely the Scheme Meeting will be delayed until the new year," it added. Afterpay intends to open the scheme meeting on December 6, and immediately adjourn it to a time and date to be determined. Square continues to expect the closing of the transaction to occur in the first quarter of 2022.
PRICE ACTION: In Thursday afternoon trading, shares of Square have dropped nearly 3% to $189.09.
