Square shares are among the most promising securities in the fintech sector. Fintech companies attract investors focused on long-term investments. To determine whether Square stock is a bargain now, examine the corporation's financial performance, its advantages, and disadvantages.
Square Inc. - is an American corporation that provides a platform for online payments. The company was founded in 2009. The founders of the corporation were Twitter co-founder Jack Dorsey and his colleague Jim McKelvey. Initially, the entrepreneurs sought to develop POS technology, allowing them to combine merchant services and online payments in one service.
Square has been listed on the NYSE under the ticker symbol SQ since November 2015. The company went through seven rounds of financing during its IPO. During the initial public offering, the corporation was valued at $2.9 billion.
Square was renamed Block in December 2021. One of the reasons for the rebranding was to reflect the corporation's focus on a wide range of services. Block Inc. owns several Fintech companies. These include Weebly, the Tidal service, and the digital payment platform Afterpay.
Square provides services to individuals and businesses in the area of online payments. The corporation provides clients with software and hardware for POS terminals, services for online transactions, and website hosting services. In addition, the company owns a platform for developers, whose users have access to programming and software development tools.
One of the popular developments of the company is Cash App. It can be used to transfer funds from one person to another through a mobile platform or website. The corporation regularly adds new options to the app, such as Round-Ups. This update allows investors to invest in stocks and cryptocurrencies using Cash App debit cards. The latest development also includes a feature that allows you to buy assets with a deferred payment option. This allows Square to increase investor engagement and business activity for Cash App users.
Square has also not stayed away from the popularization of cryptocurrencies. In October 2020, the corporation invested $50 million in bitcoins. In February 2021, the fintech giant invested an additional $170 million in the main cryptocurrency. The company's management argued that Bitcoin could become the main currency for online payments in the future.
Square's stock rose nearly 24% in July 2022. Investors were more positive than analysts, who were worried about rising inflation. Experts are now downgrading the stock outlook for many fintech companies, including Block. Amid the unstable geopolitical situation, Square's quotes may react with sharp ups and downs to changes in the corporation's financial results, expert forecasts, and other events.
The company reported a net loss on Block stock of $0.36 per share for the second quarter of 2022. By comparison, for the same reporting period in 2021, investors saw a gain of $0.40 on Square Stock. In the second half of 2022, the company's stock quotes are characterized by increased volatility.
From the beginning of 2022 through the end of July, Square stock is down more than 50%. During that time, many securities from the Fintech sector sagged in price. This situation is due to the Federal Reserve's tightening of its methods to deal with rising inflation. Despite the collapse of quotations, the value of SQ shares at the beginning of August began to recover. Within a few days, the rate of securities of the fintech giant rose by more than 19%. After the publication of the quarterly report, quotations fell again by more than 7%.
Square reported total revenue of $4.40 billion for the second quarter of 2022, down 6% from the same period in 2021. Block reports a decline in revenue from bitcoin-related financial transactions. Excluding profits from cryptocurrency transactions, the company's year-over-year revenue rose to $2.62 billion (up 34%). Square posted a net loss of $208 million in the second quarter of 2022.
The number of transactional accounts through the Cash App reached 47 million per month. This service attracts the attention of users because of the wide list of available features. Analysts' research showed that Cash App in 2022 took the first place among similar applications by the number of downloads in the U.S. This development of Square surpassed even PayPal in this indicator.
Wall Street analysts predict that Square's stock will trade between $104 and $132 in 2023. In 2025, the average value of the company's securities could be $338. Investors aiming for long-term profits can buy Square stock during the downturn in quotes. In the future, Block's stock price may benefit from business expansion, improvements in online payment technology, a focus on cryptocurrency transactions, and other factors.
In March 2020, Square's stock was trading at $53. After the pandemic began, online payments worldwide increased, triggering a rise in the company's stock price. By early 2021, quotes had risen to $215.
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In August 2021, Square's stock price was at $266. By August 2022, the quote had dropped to $73.
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