Square Stock Surge: Evaluating Investment Potential Amid Cash App and Afterpay Expansion (SQ)

• Block, formerly known as Square, has been focusing on its Cash App banking services, attracting investor attention. The future performance of SQ stock, however, still largely depends on the direction of its merchant business.
• The company reported first-quarter earnings and revenue that exceeded estimates and unveiled new plans for Bitcoin. As of May 6, Square stock was down 10% for the year.
• Block faces growing competition and has replaced the head of its merchant Square business, Alyssa Henry, with Block and Twitter founder Jack Dorsey.

Block, previously Square, gears up for growth with Cash App and Bitcoin plans, despite facing stiff competition and a 10% drop in stock this year.

Square Stock: Cash App Growth

The growth trajectory of Square’s consumer Cash App, cryptocurrency Bitcoin, and the Afterpay acquisition are key issues for Block. The Square Cash App, which competes with PayPal’s Venmo and Zelle, helps individuals manage money, buy stocks and cryptocurrency, among other things. As of Dec. 31, the Cash App card had reached 23 million monthly active users, with 2 million Cash App deposit monthly active users.

Block Stock: Bitcoin Products

In late 2021, Square changed its name to Block, reflecting the company’s commitment to blockchain technology, which underpins cryptocurrency. Block aims to build infrastructure that enables bitcoin-based commerce on its merchant platform. In January, Square announced its Bitcoin digital wallet was available for Cash App users in 95 countries.

SQ Stock: Afterpay Acquisition

In early 2022, Square closed the acquisition of Australia-based consumer lending startup Afterpay. “Buy now, pay later” (BNPL) companies such as Afterpay compete with credit card networks. In another deal, Square acquired a majority stake in Jay-Z’s Tidal music streaming service for $297 million in cash and stock.

Block Stock: Competition Heats Up

With multiple products, SQ stock faces stiff competition in both consumer financial apps and the small business market. Rivals include PayPal Holdings (PYPL), First Data’s (FDC) Clover unit, Shopify (SHOP), merchant acquirers, and well-funded startup Stripe. For merchants, Square makes credit-card readers that plug into mobile devices. Its Square Capital division provides loans to sellers.

SQ Stock Fundamental Analysis

Square earnings for the period ended March 31 were 74 cents per share on an adjusted basis, up 85% from the year-earlier period. Analysts had projected earnings of 72 cents a share. Also, Square said net revenue came in at $5.96 billion, up 19% from a year earlier, including Cash App transactions for bitcoin. Square stock analysts had predicted revenue of $5.83 billion.

Conclusion

Despite facing stiff competition and a 10% drop in stock this year, Block, formerly known as Square, is gearing up for growth with its Cash App and Bitcoin plans. The company’s future performance, however, still largely depends on the direction of its merchant business.