Square buys Tidal for $297 million, Jay-Z joins board

Yahoo Finance’s Julie Hyman, Myles Udland, and Brian Sozzi discuss news of Square’s acquisition of Jay-Z’s Tidal.

Video Transcript

MYLES UDLAND: Let's talk a little bit about some deal news this morning, in kind of an interesting mishmash of a mad lib, if you will, of celebrity interests. One of the more interesting CEOs we have out there. This is Square buying a majority stake in Tidal. This is Jay-Z's streaming music service. Jay-Z is going to join the board of Square. Of course, Square run by Jack Dorsey, who is also the CEO of Twitter.

Square have seen a huge run up in its stock just this week. The company finally got approval to have Square Bank. So they now have a banking charter. They also have seen a huge benefit to their business from crypto trading within the Cash Ap.

I'm not-- I mean, I don't know, Julie, am I missing something here with the streaming music play? Spotify shares, for what it's worth, not really reacting to this news, but certainly there's a reason that Jack Dorsey and the team at Square thinks that Jay-Z joining the board, which I think is probably the biggest part of this news, is something meaningful for their business.

JULIE HYMAN: Well, reportedly, Dorsey and Jay-Z are friends. That's something just by way of background that we can mention. Reportedly, they spent some time on yachts together. Presumably, one of the things they talked about was this deal, But yes, Tidal is a bit confusing here, right? We don't know, I don't believe we know, how many users Tidal has.

It is build as a streaming service that is more geared towards the artist, in terms of compensating the artist in what they say is a more fair way. And this is something that Dorsey talks about in the release. He said, it comes down to one simple idea, finding new ways for artists to support their work. Tidal, the company says, is going to operate independently.

We should mention, SoundCloud recently came out with a new way to compensate artists on its platform as well, that it says, is going to be more equitable. So this is something that the streaming music platforms are talking about. They also say, by the way, Square also says that these results are not going to be material, at least in the short term. So that's an interesting wrinkle in all of this as well. But yeah, I think that it's a little bit confusing what exactly is going on here and what the motivation is.

BRIAN SOZZI: I'll just echo that. I think this is a bizarre deal, and essentially, Jack Dorsey paid $297 million to get Jay-Z on his board to help promote Square. I mean, that is the reality of what you're looking at. Nothing against Tidal. It's an incredible platform, cool music platform. It's great.

But at the end of the day, you don't see PayPal in a bidding war for Tidal. And PayPal obviously competes with Square. I don't think PayPal even would even think about buying Tidal. So, again, this is something clear that Jack Dorsey has cooked up for whatever reason. Only he knows.

MYLES UDLAND: Hey, you know, Jack Dorsey does his thing. It has worked extremely well for Square shareholders. It's working better for Twitter shareholders now. So we'll see how that plays out.

Let's talk about a couple of trending tickers here on Yahoo Finance this morning. And the meme trade, the Wall Street bets trade, the short squeeze trade, however you want to characterize that, continues once again. Tanger Outlets, ticker is SKT. Brian Sozzi, maybe you have the background on why that is the ticker for Tanger Outlets.

Stock is higher. It was-- it was ripping higher in the free market, up about 25%. And this one-- and now it's up about 7%, but this one [INAUDIBLE] pretty much pegged to a short squeeze. Tanger stock got caught up in the original GameStop squeeze back at the end of January. Not its first rodeo here with this latest market moment, but you know, I guess this is now what passes for-- for news these days.

BRIAN SOZZI: Yeah, and this one also befuddles me too. And I think they should change their stock symbol to OLT, Outlet because that makes a lot more sense than SKT. But there's another stock that we've seen throughout this whole Reddit mania. That is-- it's a consumer name, it's easy to understand, and I think that's why you're seeing a lot of folks come up here and buy or show interest in a company like this.

And also too, you know, we've talked about reopening trades. What better reopening trade than an Outlet center. I mean, clearly people are going to need new clothes, right? Julie.

JULIE HYMAN: Yes. I mean, I do think, though, that in recent years, we have really seen the waning of outlets, right? For a couple of different reasons. One we have seen online replaced that sort of treasure hunt aspect of outlets, which people can do online now at various sites. And the other issue is, I mean, this is not new news, right?

But outlets aren't really outlets anymore. Outlets used to be excess merchandise that were made by retailers. Now it's a special outlet merchandise that is made by retailers at a discount. So, you know, I think on a secular basis, on a long term basis, we're still seeing this sort of decline of the outlet to some extent, as-- as appealing as it once was. But sure, people are going out to shop. Why not there?

MYLES UDLAND: Or maybe we go with the barbell approach where you're either buying an exclusive, supreme drop that there's only a hundred of, or you got to go to the outlet store to get your soft pants, to make it through-- to make it through to work.