Square Buys Commerce Management Platform Stitch Labs

Stitch Labs makes inventory and order management, channel management, and fulfillment solutions systems.
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Square  (SQ) - Get Report, the payments company, announced Friday that it has bought Stitch Labs, an operations management platform used by growing commerce brands, for an undisclosed sum.

“Stitch Labs has a strong background in building key tools for businesses such as inventory and order management, channel management, and fulfillment solutions,” Square wrote in a blog post.

“While Stitch Labs won’t take on any new customers, Stitch Lab’s products will continue to operate for existing customers until spring 2021. Longer term, we plan to sunset Stitch Labs’s products so the team can focus on building out Square tools,” Square said.

On Thursday, Cowen analyst George Mihalos downgraded Square to market perform from outperform, with a share-price target of $119.

While the coronavirus has provided a boost to Square’s Cash App mobile wallet, it’s not as good for Square’s core clients - small businesses, he said.

The coronavirus has hammered those business, and many of them will have trouble recovering. The present share price may not be taking that completely into account, Mihalos said.

“The impacts from Covid-19 are a tale of two cities for SQ,” he wrote. Cash App and other consumer-related services are thriving. But, “the Seller business will likely require a multi-year recovery given outsized exposure to small and medium-size businesses.”

Some analysts are critical of the fact the Square’s CEO Jack Dorsey works only half-time at the company, as he’s CEO of Twitter too.

Square shares recently traded at $126.34, down 2.36% and have soared 102% year to date.