Stocks

Square Is No Circle

I would think Square needs no introduction but, Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions.

Square announced earnings this past week. The company reported stronger-than-expected fourth-quarter financial results, but disappointed investors when they forecast their numbers for the first quarter.  On the news the stock price dropped after hours and opened right in a daily demand zone this morning.

I have come to like Square over the last 12 months, not because I’m a customer, but because I see them as a Disruptor.  I’m a so a bit bias to Square because of their first to market initiatives into Cryptocurrencies.  Back in April of 2018, Square allowed customers buy and sell bitcoins via its Cash App in all 50 U.S. states.

But when I look at Square longer term, I think the drop in price was just noise because of what they are going after.   In a previous earnings call, former CFO Sarah Friar mentioned that Square is positioned to not only grow into new markets, such as mobile payments, but also take share away from larger financial service firms.

Square is starting to displace traditional money management and banking services through their services like payroll management, invoicing, and business loans from Square Capital.  For example, their new Square card for merchants gives sellers immediate access to cash after a sale.  Other services include, Instant Deposit, Cash Card and Caviar which have been among the largest contributors to growth of their subscription and services revenue.  Thus, it should be no surprise that the last quarter marked the company’s sixth consecutive quarter of accelerating revenue growth thanks to subscription services and transaction revenue.

Source

The addressable market that they are going after makes the stock price cheap longer term. Square is one of those generational type stocks, like Amazon and Apple were 20 years ago and will surely be a multibagger stock in the years to come.   Short term the chart suggest Square can move back to the highs of $82.

I was suppose to publish this post yesterday, the target was hit yesterday as well.

This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.

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