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Square, Facebook Partner To Bring Ads To Small Businesses

In a blog post Wednesday, digital cash register and payments processor Square ( SQ ) announced that it would integrate Facebook ( FB ) ad buying into its small-business software. The new integration will enable merchants using Square software to buy and target Facebook ads, aiming to help the merchants understand the effectiveness of online ad campaigns on the social network. Square will earn a subscription fee. “There’s a lot of excitement around buying Facebook ads, but the critical missing link is: If I put down $5, how do I know if it worked?” Saumil Mehta, Square’s customer engagement lead, told the New York Times . “The ability to track and close the loop from advertisement to sale — that’s the holy grail.” The company offers a range of digital cash register hardware as well as software that performs marketing tasks. The company’s financial business offers small-business loans — it assesses risk based on the wealth of transaction data it accumulates — and other financial services such as payroll. It also does payments processing — a business that some analysts and investors have criticized for having tight profit margins. Square must share its transaction fees with credit card firms and other financial institutions. Square also has a peer-to-peer payments app called Square Cash that competes with PayPal ( PYPL ) and its offering, Venmo. CEO Jack Dorsey is also CEO of  Twitter ( TWTR ), which is based about a block away from Square’s offices in San Francisco. Square stock was down 4%, near 12.50, in afternoon trading on the stock market today but rose earlier to a four-month high of 13.80. The company has an IBD Composite Rating of 46, where 99 is the highest, and its November IPO generally disappointed. Shares priced at 9, peaked at 14.05 the first day and have mostly lagged ever since. Wedbush analyst Gil Luria warns that the stock is volatile because it has a large number of short sellers betting on the stock to fall, as well as a small float. Company insiders, including early venture capital investors who can’t sell until May under the IPO’s lock-up provisions, hold a significant number of shares. Square beat Wall Street expectations for Q4 sales in the company’s first release since going public in November. Executives have said that the company will turn profitable this year. In 2015, the company’s losses widened to $179 million from $154 million in 2014.

Online Travel, Other Tech Giants Set Sights On Cuba

As President Obama stands beside Cuban President Raul Castro in Havana and brokers historic talks to thaw relations between the two countries, online travel giants and other Silicon Valley titans have set their sights on building businesses on the island nation. The $8.4 billion tourism industry is likely to swell once Washington allows general tourism to the island nation. For now, a license from the Treasury Department is required for legal travel to Cuba, but the online travel kings have been quick to strike deals to build sales to that nation. Still, online travel firms shouldn’t expect any big returns on their efforts for three to five years, says Douglas Quinby, an analyst with travel research firm Phocuswright. “But once all the ducks are lined up, I think you’re going to see a lot of interest for U.S. travelers,” Quinby told IBD. “It’s a huge Caribbean destination, it’s got great beaches and sun.” Online travel giant Priceline ( PCLN ), via its Booking.com platform, already is setting up shop in Havana and allowing U.S. citizens to reserve and pay for rooms at Cuban and foreign-owned hotels. “Members of our leadership spent many weeks working hand in hand with the Cuban government and tourism authorities, hotel partners, and banks to ensure that when we launch a few weeks from now our customers will experience the secure and seamless service they’ve come to expect from Booking.com,” Todd Dunlap, managing director of Booking.com Americas, told IBD via email. Expedia ( EXPE ) is working on getting travel to Cuba online as well — though it did not share a timetable or a specific date that bookings could begin. “We currently have a team working across multiple channels to help enable U.S.-to-Cuba travel, taking every step to ensure that the solutions align with the laws governing travel between the countries,”  company spokeswoman Sarah Gavin said in an emailed statement. Privately held Airbnb has been operating in Cuba for a year, and is available to U.S. citizens in Cuba. The San Francisco-based firm lets travelers rent homes, rooms in homes and apartments. According to an Airbnb blog post , U.S. visits to Cuba rose 77% in 2015, to 161,000. The company says it’s working closely with the Cuban government. TripAdvisor ( TRIP ) spokeswoman Julie Cassetina told IBD via email that the company is “now displaying hotel metasearch for Cuban hotels” on its website, but she declined to make executives available for an interview. Silicon Valley Heads To Havana Outside of the online travel agency kings, the tech contingent included IBD Leaderboard stock PayPal ( PYPL ). In a blog post Sunday, PayPal CEO Dan Shulman outlined his case for targeting Cuba. The major cash cow for the firm is likely to be in assisting Cubans who receive money from sources in the U.S., an influx which at the moment, according to the blog , accounts for $2 billion, or 3%, of the Cuban economy each year. It’s a chance for PayPal to expand the reach of its Xoom subsidiary, which handles international transfers. PayPal bought Xoom for $890 million in July 2015. The blog also makes the pitch that PayPal plans to find ways to attract Cuban small businesses — which at the moment are mostly not set up to process credit and debit cards. Privately held Stripe, which competes with PayPal payments-processing subsidiary Braintree, also made the trip to Cuba. Stripe  said in a blog  that it would start offering Cuban businesses the ability to set up bank accounts and incorporate in the U.S. On the trip, President Obama said Alphabet ( GOOGL )-owned Google would try to help ensure that Cubans have access to broadband Internet, which remains scarce, especially outside of large cities. “We know, from the experience of many countries around the world, that new technologies and improved internet access can help people in their daily lives, provide new information and experiences, and help harness a country’s creativity and ingenuity,” Brett Perlmutter, the Cuba lead for Google Access,  wrote in a blog post Monday. “We hope to have the chance to offer more services to the Cuban people in the future.” Xerox ( XRX ) CEO Ursula Burns also attended the trip in a fact-finding capacity. “Recent changes in U.S. regulations may afford new commercial opportunities in Cuba,” Burns told IBD in an emailed statement, “but the parameters of those opportunities are not always obvious. The U.S. government has worked hard to describe what the recent changes mean. I think part of my job on this trip is to evaluate what they mean in light of the economic realities here in Cuba.”

Are Apple, Facebook, Google Shopping For Payments Acquisitions?

Silicon Valley tech giants Apple ( AAPL ), Facebook ( FB ) and Alphabet ‘s ( GOOGL ) Google are likely to begin acquiring payments firms, with  PayPal ( PYPL ) among the possible targets, investment bank Wedbush said after polling what it termed a panel of experts. The shopping spree will be sparked by slowing industry growth and “capital markets back at higher valuations,” Wedbush analyst Gil Luria wrote in a research note Monday. The panel told Wedbush that Google would be the best fit to acquire PayPal. Luria, however, disagreed with the panel, writing that he believes MasterCard ( MA ) would gain more value from a PayPal acquisition. PayPal stock was up 4%, near 41, in late-afternoon trading on the stock market today . The IBD Leaderboard stock cleared a 40.03 buy point early Monday. The stock has an IBD Composite Rating of 94, where 99 is the highest. Wedbush panelists included a former senior vice president at PayPal, as well as executives with credit card companies including MasterCard. On Sunday, PayPal announced that it would be opening up its money-transfer service Xoom to Cuba. The announcement coincided with President Obama’s historic trip to the island nation. Square Not Likely To Be Acquired The report dismissed Square ( SQ ) as a potential acquisition target until it can attract more than just “small-ticket merchants,” Luria cited the panelists as saying. Luria speculated that Visa ( V ) would unload its approximately 1% stake in Square vs. acquiring more. Earlier this month, Square posted its first quarterly earnings reports since its November IPO. Results met Wall Street expectations, but slowing merchant growth led to a disappointing outlook . Square stock rose to a 2016 high on Monday, up 10% near 13, in late-afternoon trading. The gains came with no apparent news. In an email, Luria told IBD, “Square is very heavily shorted with a very small float — that has translated into significant volatility in the share price, including today.” The float will rise in less than two months: The IPO lockup period for insiders and major venture capital investors expires May 17. The panelists said that if Square’s lending business continues to grow at 200% to 300%, it will likely “end badly.” Square Capital provides cash advances to some of Square’s small-merchant customers. But Square Capital is essentially a subprime lender, Luria has told IBD.