Square is down 80% from its year 52 week highs and should be considered for your portfolio. Note their revenue since 2018.
2018: 3.2 billion
2019: 4.2 billion
2020: 9.4 billion
2021: 17 billion
TTM: 16.5 billion.
In 2021, about half that revenue was from the Cash App with bitcoin purchases.
Bitcoin transactions through the Cash App only generate 2% profit margins. Their POS revenue is far more profitable.
Lets take a deeper look at this 17 billion dollar revenue.
24% of SQ revenue with the Square POS
63% of SQ revenue is Cash app.
13% of SQ revenue is services
Block's POS segment of business is growing revenue at 27%. They currently control 38% of the POS market share.
Their services segment is growing at 88%.
Cash App has 36 million active cash app users, 7 million of which have the Cash app debit card.
Square has purchased about 220 million in bitcoin that they claimed a loss on in 4th quarter of 2021 due to the GAAP accounting rules. They have a substantial gap accounting loss to report with bitcoin down 68% from his highs and Doordash down 76% from its highs, both of which are on Block’s balance sheet. Side note, Block sold ‘Caviar' to Doordash in August of 2020 for 410 million. Square also recently completed their acquisition of Afterpay for 29 billion, adding considerably to their expenses. *Note, Block’s current market cap is 34 billion, despite this 29 billion dollar acquisition.
Square Profitability:
Cash app generated 518 million in profits.
Square POS generated in 657 million in profits.
Square POS made about 56% of their profits despite being only about a quarter of their revenue. Block forgoes profitability on bitcoin transactions with hopes of progressing the technology. Jack Dorsey is also spearing the advent of Web5.
38% of Block’s gross profit came from 4 or more SQ products, up from 10% in 2016. This reflects services a growing ecosystem to include the Cash App Debit Card, buy now/pay later for the customer and loans for the businesses Block serves.
Investing in fin-tech in this climate is not for the faint of heart. PayPal is down 77% from its highs while Block is down 80%. In June of 2018, SQ traded for $61. Now, 5 years later, in June 2022, SQ is trading for $57.00. Shareholders now get the added benefit of additional revenue segments like their debit card, loans for small businesses, buy now/pay later and the cash app. Block has demonstrated their innovation by growing new revenue segments while protecting their bread and butter POS service.
Price Target: $150- $210