Seems to me that SQ is expecting some level of massive payment issues coming into the future - 20-30% holdbacks is a little excessive. It would be interesting to see how many small businesses start jumping ship. After all, how could any company withstand a 20-30% holdback for no real reason connected to their company?notenoughsleep wrote: ↑ https://seekingalpha.com/news/3585442-s ... -money-nyt
Thousands of small businesses, including legal consultants, plumbers and construction firms, say that Square (SQ +1.6%) has started to hold back 20%-30% of the money they collected from customers with little notice, the New York Times reports.
Paypal paid 4 billion usd for some chrome extention. The management are clearly idiots. Stay away from Paypal.Readflagdeals wrote: ↑ Perhaps PYPL is a better option ?
Don't own any but have been looking at both PYPL and SQ.
Have V & MA already. MA seems to be a not the greatest performer this last bit - V has been stronger for me.
You can say the same for #1-3 for a lot of stocks....craftsman wrote: ↑ Consider the following:
1. They reduced their revenue guidance by 50% for this year.
2. They reduced their revenue guidance by 25% for next year.
3. The price is now higher than it was before the change in guidance.
4. The only bit of positive news are: their app seems to be going well and they will get their bank charter next year.
So, if you go by the fundamentals (ie points 1, 2, and 3 above), there is no reason for this price. So, that leaves point 4...
This
good job on your paypal call and yes they grew revenues by 17% CAGR and EPS by 23% CAGR in the last 5 years (almost double the growth of money center banks in canada). i have revenues growing from mid to high double digits the next few years and EPS growing around the same as historical in my base case. it's very clear that those bearish on payment processors/network have not even read the company description on their 10k lol. with that said, SQ is the riskiest out of V/MA/PYPL as SQ is focused almost entirely on micro merchants (revenues <250k). valuations are stretched at these levels, but should eventually normalize once the fed pulls the plug.notenoughsleep wrote: ↑ Well these idiots are making me a lot of money! My average price is in the mid-70s
Thank youJLei2k wrote: ↑ Since everyone else has given you the bear case.
I'll give you the bull case. What they are trying to pull of is incredibly ambitious.
They are trying to be everything a new age bank without the baggage. With the lending side of their business being much better than traditional lending because they have access to the data of all your sales. And if you are fully integrated with everything they can have even proactively offer you loans because their algorithms think you should expand your business. This is the traditional side with the brick and mortar POS. COVID has given them ability to distribute PPP loans to businesses and they had 60% of loans given out to new customers. These are new merchants that could potential be Square customers.
COVID has given them an explosive catalyst to Square Online Store. Which had 5X Gross Merchandise Volume at the end of Q1/ Early April (and much more). It's basically Shopify which a lot of their brick and mortar merchants have taken to establish e-commerce. Huge addressable market we all know Shopify is mooning 65X sales or whatever its trading at now. Shopify sees the threat and is offering POS hardware too. Of note despite the explosive growth due to COVID, Square Online Store is extremely small (they are late to the game).
However get rid of all of that and I'd still invest in Square. And that's because of Cash App.
Cash App is a mobile wallet that is basically a bank account. You can send money, pay merchants, earn credit card like rewards, invest, buy bitcoin. Basically everything you need, the money can stay all in the Square ecosystem. It's Elon Musk's vision of what Paypal was to become before he left.
Mobile wallets have become the default way to pay in other countries (namely China) and in a cashless society will become the way to go. Canadian banking and payments infrastructure is strong here with tap and Interac e-transfer etc which is why so many of us don't get it. Around the world and even in the states, this shit is not easy to do and mobile wallet apps will take over they just needed adoption which accelerates as a network effect takes over.
And then comes COVID.
https://trends.google.com/trends/explor ... app&geo=US
Basically with the 1200 Trump Bucks that was given to everyone. So many people are unbanked in the States, or do their banking physically and were not able to go given the shelter in place orders. In comes cash app. The application process was painless (download an app and set it as your direct deposit) and bam, government money in the app this is now your new bank account once you discover how much easier it is than traditional banking.
It accelerated their customer acquisition by YEARS. This is why when they missed the quarter the stock dropped and then throughout the conference call they mentioned the cash app numbers and the stock immediately rocketed 10% the next day.
If they become one of the default digital banks they are easily worth way more than they are currently worth which is not limited by region in the states (a lot of banking is regional) and not really limited to just the States either.
I'm very long and think this is a potential 5-10 bagger from where I bought it. It's all about execution and maybe they fail. The vision is incredibly ambitious and they are founder led by a pretty decent horse in Jack Dorsey. The market is starting to see it.
Also that said. Valuation a bit stretched, stock is running ahead of itself (going up in a straight line is not healthy, it's just the current rush to growth/ tech as safety). A pull back would be healthy, and depending on allocation of the rest of my portfolio I want to buy more.
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