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Sunday, August 14, 2022

Can Square Continue Its Meteoric Growth?

Mobile payment solutions are beginning to take over the credit card payment industry, and Square, Inc. (NYSE: SQ) is at the vanguard of the attack with its impressive range of mobile credit card processing technology. Square was founded by Jack Dorsey, who also founded Twitter (NYSE: TWTR). In its short ten year life, Square has transformed internet merchant services and mobile payments, making it a market leader in the industry.

The Square app has been downloaded more than 33.5 million times, and individuals use Square technology to send and receive payments, exchanging funds with friends and family in addition to making payments to businesses.

Businesses of every size can use Square to accept credit cards by either processing customer credit cards manually or using the swipe card reader that plugs into mobile devices. The reader is compatible with other mobile payment solutions, such as ApplePay by Apple (NASDAQ: AAPL) and in the UK costs £29, although a lot of deals see it given away free.

Square has a complete arsenal of other products and services to help small businesses compete with larger organisations, including financing, tracking sales, and monitoring inventory. Square Payroll manages the task of calculating employee pay, and if that wasn't diverse enough for you, the company recently purchased a mobile food delivery site and Square for Restaurants launched in May 2018.

'Square's strategic plan is to expand by acquisition, and its recent purchase of Weebly gives it a whole new platform of processing revenue. For the moment that seems like a sound ploy but the rapid development of Wix as a competitor could mean that Weebly will struggle in the future and my money would be on Wix to stay the course. I'm also not a fan of Squares' dalliance with bitcoin technology, and I would be wary of any significant investments in that area.

In November 2016, Square traded at $12 per share. Six months later, it had doubled to $24. By September 2018, it was just shy of $100 per share, so growth was meteoric but then slipped back to a low of $52 in December 2018.

With such a vast market to go at there is going to be no slowing of growth for Square and the only question you can have as an investor is how quickly the stock will double again in value. There may not be the stratospheric growth of the past two years, but with more acquisition and mergers, it could be an exciting ride. Today's price of $66 is an opportunity to get on board.