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Square Company Analysis (#SQ)

Square Company Analysis (#SQ)

17 March 2021

Square is an American technology company that develops solutions for accepting and processing electronic payments. The company’s main product, the Square Register card reader, allows individuals and businesses in the United States, Canada, Japan, and Australia to accept debit and credit cards on their iOS or Android smartphone or tablet. You can either manually enter the card data or read it using Square Reader, which connects to your smartphone or tablet via the headphone input.

Despite the fact that the company is the leader of the American market of payment terminals, it has serious competitors in related areas. Such as PayPal, Visa, and MasterCard.

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Revenue for 2020: $9.5 B (+102% compared to the previous year)

Operating loss for 2020: $18.3 M

Net income for 2020: $213M (-43% year-on-year)

Earnings per share for the latest quarter: $0.32, up from $0.24 forecast

Despite a multiple increase in revenue last year, the pandemic has seriously hit the margins of the company’s business.

Distribution of revenue by business segment:

Bitcoin revenue – 48.13%

Transaction-based revenue – 34.69%

Subscription and services-based revenue – 16.21%

Hardware revenue – 0.97%

The company is growing and promising in the technology market. Despite the fact that Square does not pay dividends, the company’s shares have recently pleased investors with high capital gains. After all, at this stage, it is more profitable for the company to spend free money on business development.

Thus, Square is a promising company even despite an operating loss in 2020, because the market in which it operates will grow in the next few years. However, it should be understood that the company’s shares are currently significantly overvalued by the market.

17 March 2021
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