Square: Maintaining a Healthy Financial Statement and Showing a Strong Stand!

Square: Maintaining a Healthy Financial Statement and Showing a Strong Stand!

A Brief about the Company


Based in San Francisco, California, Square (SQ) is a company that focuses on financial services and digital payments. It was founded in 2009 and launched its first platform in 2010. Currently, Square’s market cap is USD 122.473 billion, with the share price moving around USD 266.


Square’s Services and Products


The company provides many digital products and services across varied fields, such as:


  • Retail
  • Food and Beverage
  • Professional Services
  • Enterprise


Under its assets, the company has the Cash App, which allows users to send and receive money for free through a mobile application, in addition to the Square Point-of-Sale, which is a free application that allows merchants to process payments via smartphones.


Fundamental Analysis


  • On 1, August, 2021, Twitter founder and Square co-founder, Jack Dorsey, announced that the fintech company plans to acquire the “Buy Now, Pay Later” platform from Afterpay for USD 29 billion to be paid in stocks. According to the agreement, Afterpay stockholders will become Square stockholders as well, at a rate of 1 new Square stock per 3 stocks of Afterpay. This acquisition is a powerful opportunity for merchants that will adopt the “Buy Now, Pay Later” policy.
  • Square shares rose 13% in July, which is their biggest monthly gain since March.
  • The firm reported second-quarter results that included better than expected Earnings Per Share.
  • On July 20, 2021, Square turned to helping small business owners and giving them a financial solution to aid them in managing their cash flow easily, by launching a banking suite of financial products.
  • Since the company has announced the free debit card for business, the adoption has increased every quarter, as more sellers seek a way to have immediate access to their funds. Compared to last year, the number of active Square card sellers increased by 140%, and the total balance stored rose by 250% in the same period.
  • In 2020, SQ showed strong results, managing to retain and slightly grow its gross payment volume on the seller side of the business. But the company still thinks there is more room for growth! According to the CFO, Amrita Ahuja, Square plans to invest USD 800 to 850 million in incremental operating expenses this year.
  • Marketing-wise, Square will build on its various marketing campaigns and salesforce this year.
  • The company launched its Cash App back in 2019, which is an app available only in the UK and US for a mobile payment service developed by Square that allows users to transfer money to one another using their smartphones. According to data, this app recorded 36 million active users till March 2021.
  • Since it maintained a huge success, the firm is planning to focus on Cash App users adopting more products within it than older cohorts, which leads to higher monetization rates, thus, allowing investing with even greater amounts than the original plan.
  • For the second quarter of 2021, Cash App generated a gross profit of USD 546 million, up by 94% year-on-year, and USD 281 million in revenue.
  • In recent years, the company has managed to roll out new features at a quick pace, adding cash cards, boosts, bitcoin, and stock investing, as well as a cash advance feature among other small improvements.
  • In April, Square moved to the global music and entertainment business by acquiring majority ownership of TIDAL.
  • The firm considers bitcoin to be an instrument of global economic empowerment, thus it purchased 4,709 bitcoins on October 7, 2020, at a total price of USD 50 million, and once again in February 2021 at USD 170 million. However, according to Square’s financial statement, the company recorded a USD 45 million loss related to its bitcoin purchase.
  • In September 2020, the company launched the Cryptocurrency Open Patent Alliance (COPA), which is a non-profit group of people and companies established to encourage cryptocurrency technologies and their adoption by more companies.


The Outlook


In the last five years, Square gained an almost unbelievable 2289.42%, 81.80% of which were in one year. Through the pandemic, it kept healthy financial statements and is still one of the few companies that showed a strong stand.


The all-time high for the stock was USD 283.19, recorded in February. Earlier this week, the price came close to that high, trading above the USD 280 landmark for the first time in five and a half months.


According to these facts, we can say that Square has indeed a strong plan for its future. Unlike other companies, there is no need to fix anything after the pandemic, because it already stood strong, and the company is surely planning to continue on the same path.

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