SQ Stock: The Payments Stock That Continues to Grow

Square Stock (NYSE:SQ): The Payments Stock That Continues to Grow
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Square Stock to Gain Further as Ecosystem Expands

If you have ever swiped your card to make a payment, you understand how easy and convenient it is. With the rise of technology in the financial services sector, the financial technology (FinTech) space is getting more exciting. There are many players gaining from this trend, but one name stands out.

Square Inc (NYSE:SQ) has grown by selling card readers and other payment services to small- and medium-sized businesses. The company has built an interconnected ecosystem that helps sellers start, run, and grow their businesses.

Square provides advanced software with affordable hardware that enables sellers to turn mobile and computing devices into powerful payment and point-of-sale solutions. The company has come a long way from selling credit card readers. And the gains posted by SQ stock prove this.

Square Inc offers software and services to manage the entire payment life cycle, from onboarding to accepting in-person and online payments, to fast settlement of funds managing disputes.

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It has become difficult to ignore Square Inc’s devices. The company has grown rapidly and serves millions of sellers from a diverse set of industries and geographies, including the U.S., Canada, the U.K., Japan, and Australia.

For the year ended December 31, 2017, Square processed $65.3 billion of gross payment volume (GPV), which was generated by 1.4 billion card payments from about 287 million payment cards. (Source: “Q4 2017 Shareholder Letter,” Square Inc, February 27, 2018.)

Square has been increasing its client base and helping sellers grow their businesses. This has led to continuous financial growth for Square Inc, which is reflected in the phenomenal rise in Square stock.

The company’s “Cash App” empowers individuals by providing easy access to the financial system and allowing them to electronically send, store, and spend money. Square Inc recently witnessed higher demand for Cash App when it introduced a feature for buying bitcoins.

The company has also launched “Square Terminal,” a portable, all-in-one payments device to replace traditional keypad terminals. Square Terminal will likely expand the company’s addressable market to serve new sellers and new use cases.

Furthermore, the company recently introduced “Square Installments,” its new purchase financing plan. It gives sellers a growth tool that ensures they get paid in full while allowing their customers to pay in monthly installments.

Additionally, through a partnership with an industrial bank, Square Capital facilitates the offering of loans to pre-qualified sellers.

As the commerce ecosystem built by the company expands, its competitive advantage grows stronger.

The digital payments sector is one of the fastest-growing spaces right now, and SQ stock is one of the best ways to play this trend.

Square Inc is focused on strengthening commerce through multiple channels, expanding financial services, and growing international markets. As per the company’s recent investor presentation, Square Inc is building a commerce ecosystem that is worth more than $70.0 billion. (Source: “November 2018 Company Overview,” Square Inc, last accessed December 20, 2018.)

Square Inc will most likely reach its target, as clearly and consistently shown in its quarterly results. For the third quarter of 2018, total net revenue grew 51% year-over-year. It reached $882.0 million, as compared to $585.0 million in the previous year. (Source: “Q3 2018 Shareholder Letter,” Square Inc, November 27, 2018.)

GPV was $22.5 billion, up 29% year-over-year. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was $71.0 million in the third quarter of 2018, compared to $34.0 million in the third quarter of 2017.

The continuous innovation and growth have been good for Square stock, which is up by about 68% year-over-year. SQ stock is up by 160% since we covered it in Profit Confidential in June 2017.

Square-Stock-Graph-Chart

Chart courtesy of StockCharts.com

Analyst Take

Square Inc has diversified its hardware portfolio over the years, and now offers a diverse range of software and services, on top of its devices. Its advanced software helps sellers manage payments, orders, inventory, employees, and customers—all integrated to create a cohesive experience.

The company’s mission is to enable everyone to participate and thrive in the modern economy, and Square Inc is executing its strategy well. This bodes well for Square stock.