Square ($SQ) stock prices hit a record high due to the increased use of cash transfer applications. The epidemic is pushing more and more people to use cashless payments to pay for tips and services, and to fund businesses that switch to digital payment platforms during the outbreak. Since the outbreak, PayPal’s venmo and square cash applications have been used much heavily and are expected to continue. Companies that are still operating or reopening need to operate on a cash free basis. There is growing concern that using cash could lead to the spread of the virus, which has also led to increasing use of digital payment platforms. As consumers enjoy the safety and convenience of cashless environment, the continuous use of cashless platforms by consumers will continue to accelerate in the post epidemic world.
First, Square has been building the platforms for both sellers and individual consumers. It’s products Square, Weebly and Cash App has been form the ecosystem for small and medium businesses and every individual. One of its new product Cash App has even generated 27% company profit in 2019 Q4. Nowadays, Square is not just a payment system, but provide everything you need for business transactions, e-commerce, spending and investing.
As for the financial side, the company has turned profit since 2019 Q3, and analysts has been expecting better profit this Q1. As for cash flow, the company currently has $1098 million cash flow and would be good enough to go through even recessions.
As for the stock price, $ 104 is overvalued, but in the long-term if the company can utilize its large user base well and optimize the ecosystem, it would be more profitable. In my own opinion, it’s bearish in the short-term because a lot of business has to shut down; but it’s bullish in the long-term because consumer behavior change will be irreversible, and that would be the case for both Square’s Cash App and Paypal’s Venmo.
Reference:
Square Website https://squareup.com/us/en
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