Cash App just dropped a bombshell new feature in a video announcement on Twitter, Cash App Investing. Users can now invest their cash in stocks using the app. That would be remarkable in itself, but it’s so much bigger than that. Square Payments isn’t merely joining the roster of other stock trading services like Robinhood and eTrade.
Jack Dorsey’s payments app is completely disrupting the business with a revolutionary new service: He’s allowing investors to purchase fractions of any stock as low as $1.
Along with the video, Cash App announced:
“You don’t need to buy an entire share to make your first investment. With Cash App, you can own a piece of hundreds of different stocks, including the most expensive stock on the market, Berkshire Hathaway Class A, which regularly trades above $300,000 per share.”
This is a game changer because it lowers the price barrier of entry for low income earners to invest in the stock market. So if you want to invest in Amazon (NASDAQ:AMZN) stock, but don’t have $1,800 laying around, you can just buy $10 worth of Amazon, or even just $1. If you want to invest in Apple (NASDAQ:AAPL) stock, but all you have is allowance money from mowing lawns and a crisp twenty from grandma on your birthday, you can now afford to invest.
That could have lasting macro impacts on the stock market and personal finance. It changes the entire calculus of stock market investing. According to Gallup, the rate of U.S. stock ownership is still below pre-recession levels. As of April 2019, nearly half of American adults said they don’t own any stocks.
That’s most likely because they don’t have the money to spare. In May, the Federal Reserve reported that nearly 40% of Americans wouldn’t be able to tackle an unexpected $400 expense without borrowing money. That’s nearly 40% of Americans who can’t afford a single share of Amazon or Alphabet, and who probably couldn’t even swing a share of Boeing (NYSE:BA) or Apple. But with Cash App’s new feature, they could stash away $10 here and there in these high performing stocks and not even feel it.
Shares of Square Inc. (NYSE:SQ) jumped on the news, but the Dow should too now that blue-chip stock ownership is about to get a lot easier. Forget what Jerome Powell’s doing, an army of hungry lawn mowing teenagers and minimum wage workers can now inject some liquidity. Although shareholders of Square have had a rough year, their Square stock rose 4.5% Thursday morning as the company made the Cash App announcement.
Last modified: September 23, 2020 1:13 PM