When it comes to digital payments stocks, Square (SQ) is often one of the first actions that comes to mind for investors. This is for good reason.
A leader in the race for global point-of-sale and online payments market share, Square has built an impressive ecosystem aimed at bringing financial tools to every nook and cranny of the economy. The tools provided by Square provide innovative solutions for businesses and everyday consumers in an otherwise boring financial services segment.
It should be noted that the company’s Cash app has further democratized the traditional investment space. For many investors, Square’s approach to driving growth is both creative and engaging. The company’s “Cash App Fridays” marketing campaign was a huge success. The company stresses that this move has been a great success, both in attracting new investors into the investment world and in reducing the company’s marketing costs. Indeed, acquiring new customers at a lower cost is the objective of any business. As a result, it’s no surprise that investors are increasingly bullish on Square.
Square’s stock price performance has been absolutely exceptional over the past year. In fact, this stock has produced returns for investors of around 150% since mid-2020. It is certainly not bad. (See Square stock market analysis on TipRanks)
Indeed, there are reasons to remain bullish on this stock at this time. Here are some key reasons why many investors seem ready to support the Truck on Square right now.
Square’s growth profile leaves little room for interpretation
Square is arguably one of the best growth stocks between the tech and financial sectors. Many investors are already aware of this.
Looking more closely at the company’s financial data, some pretty impressive growth in the company’s income statement is apparent. Total revenue grew 266% year over year, mainly due to massive gains with the company’s ‘Bitcoin revenue’ item. Excluding this line of the income statement, Square still recorded a growth of 44% of its turnover year on year.
This growth rate is impressive, considering Square’s current size.
The company attributed most of this growth to the success of the aforementioned Cash App business of the company. For Cash App in particular, revenue growth has skyrocketed 139% year over year.
Indeed, as peer-to-peer platforms such as Square begin to exert their dominance in the market, a number of analysts are now reporting some type of win-win scenario unfolding in this space. If so, Square certainly appears to be the frontrunner to become the industry leader in the long run.
In addition, Square is experiencing profitable growth. The company’s gross profit of $ 964 million in the most recent quarter increased 79% year-on-year. The Cash app generated more than half of that growth profit, showing a gross profit growth rate of 171% year-over-year.
The revenue and profit generated by sellers also increased significantly in the last quarter. It looks like Square is doing a better job of monetizing on both sides of the deal. For long-term investors, this kind of growth is just hard to ignore right now.
Indeed, growth at any cost (or worse, at the expense of margins) is an acceptable idea in the short term, but generally a terrible idea in the long term. Square has found a way to grow quickly and do it profitably, while also creating an impressive moat-like ecosystem that could set this business up for long-term dominance.
Cathie Wood believes Square is a fundamental portfolio
It’s important to start with the axiom that buying a stock because someone else bought it, or because someone else is very bullish on the name, is a bad investment strategy. .
However, when it comes to top growth investment gurus like Cathie Bois, investors pay attention to what she buys and sells. Recently, Ms. Wood has put her weight behind Square in a big way. In fact, Square currently ranks second among all of its holdings.
It is quite the approval.
Wood continues to invest heavily in digital portfolio stocks such as Square. It is propelled by the idea that banking as we know it has to change for a long time. In a recent interview with Ms Woods, she touted the various reasons she remains so bullish on Square.
So far, she hasn’t been wrong about Square. There are a number of stocks with which investors can differ their opinions of Cathie Wood. However, Square appears to have both the growth profile and the long-term cash flow growth potential of a winner.
What Analysts Are Saying About SQ Stock
According to the TipRanks analyst rating consensus, SQ stock is considered a moderate buy. Out of 19 analyst notes, there are 17 buy recommendations, 5 keep recommendations, and 2 sell recommendations.
As for the price targets, the Average price target for SQ analysts is $ 286.90. Analysts’ price targets range from a low of $ 160.00 per share to a high of $ 380.00 per share.
When it comes to futuristic growth stocks, Square is about as good as it is today. It’s a business that transforms a huge market every day, and the company’s rate of growth indicates how successful Square has been in achieving that goal.
Until we see some sort of deceleration in growth, expectations of continued stock price appreciation for Square are hard to ignore. It is a company that provides investors with strong catalysts for long-term growth and a growing divide. For long-term investors, it’s hard to ask for more than that.
Disclosure: Chris MacDonald does not hold any positions in the stocks mentioned in this article at the time of publication.
Disclaimer: The information contained in this document is for informational purposes only. Nothing in this article should be construed as a solicitation to buy or sell securities.