Volatility worked against Square stock today.


Key Points

  • Volatility is the price investors pay to own great stocks like Square.

What happened 

Shares of financial technology company Square (NYSE:SQ) fell as much as 5.7% in trading on Wednesday as growth stocks took a hit across the market. At 1 p.m. EDT, shares were still down 3.5% for the day. 

So what

There isnt any big, market-moving news from Square today, but the stock is getting caught up in a sell-off of growth stocks. Shares of Square generally exaggerate the markets moves. With the S&P 500 down 0.7% and the Nasdaq Composite falling 0.4%, its no surprise that Squares stock is down even more than that. 


Image source: Square.

Investors should also view the move within the broader perspective. Shares are up 89.5% over the past year. They jumped just yesterday on an up day on the market and news that Square is opening payment-processing services to merchants in France

Now what

Todays move is an example of why investors should look at stocks through a long-term lens. Squares business is growing, and the company is expanding services into Europe while simultaneously disrupting banking services in the U.S. Its these expansions of the business that will help drive the stock higher. 

Volatility is the price investors pay to find great growth stocks, and Square falls in that category. Today, volatility is working against investors, but the stock is beating the market by a wide margin long term. So holding on days like this is the right move. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

Travis Hoium owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool has a disclosure policy.


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