There are so many companies that seem to promise the world yet deliver nothing. It’s disappointing to see when potential is not squandered like that, but I believe in this respect that Square Inc (NYSE:SQ) is different from the rest, stating that “We believe everyone should be able to participate and thrive in the economy.” We’ll be taking a look at how well square has managed to live up to its mission and try to understand how the company might change as it moves forward.
What Is Square?
Founders Jack Dorsey and Jim McKelvey dreamed of creating technology that combined merchant services and mobile payments into a single easy to use service. That was in 2009. In 2015 they had an IPO and now their products have been downloaded 10’s of millions of times by businesses and customers alike. Square features 2 main products we’ll focus on. Namely Squares point of sale product which you may have already seen at shops already allowing you to pay for your items with your phone and secondly the Square Cash application which allows users to send and receive money free of charge. Much like Blackberry, Square is asserting dominance in its market.
The Products That Make The Square Magical
Cash App launched in 2013 to compete with services Venmo, apply pay and google pay. These services all allowed users to send and receive money fairly easily and freely among themselves and they proved very popular for the general public and generally hated by the banks. Allowing consumers this level of financial liquidity was unseen before and these companies were part of the movement that gave us the ability to move money where and when we wanted. Cash App however expanded beyond its borders and included a means to receive direct deposit payments, buy Bitcoin and introduced recently an investing capability that gave users commission free investing.
These changes were a sign and still are that Square has been coming for the banks dominance for a while now and they are coming at them fast and hard. Couple this with the dominance Square has had in businesses allowing users to pay with just their phone; simply, easily and efficiently. They have set themselves up to be in a position of going to strength to strength. Square’s gross processing volume has increased 22.3% over the last year however with Square trading at level in excess of its EBITDA analysts are worried that it might be overvalued at its current price. Square also offers additional services customer engagement, Square Payroll and Square Register which further accommodates those key markets that Square is targeting, tightening their grip.
The 55 Million User Hole And The Small Business Market Dominance That Comes With It
Did you know that there are an estimated 55 million adult Americans without a bank account? No? Well neither did I until recently but that turns out to be Squares coup de grâce. With so many members of the population without a bank account this gives Square a massive advantage over traditional banks, all of a sudden Square through use of its products can target those people that the banks simply cannot in the same way.
The banks have been trying to get the untapped reserve of customers under their wing but have failed to do so, Square is succeeding where they did not. Next question. How many people in the world don’t have a bank account? It’s 1.7 billion… This means that when Square eventually targets the global population they will have tried a true means of doing so and that puts them at a dangerously good position for long term future growth. Similarly check out our article on silver who we also think has potential for long term growth. However it’s very possible that Square will experience another dip very soon as the market is very volatile with many people seeing the recent rally as unwarranted. It could be expected that we will see a decline in the near future.
On top of all this Square recently received conditional FDIC approval for Industrial Loan Charter Application for Deposit Insurance. This effectively means that Square will be able to operate in a banking capacity and give loans to small to medium businesses the same ones that they already have a tight grasp over. As well as to those 55 million adult Americans who don’t have a bank. The implications of this could be huge and its slated to start in 2021.
Square still has competitors much like any other company, but Square’s competitors are particularly competitive and include the likes of Google, Intuit Inc., Paypal with their Venmo product. Not to mention the multitude of other financial services companies that are trying to be in this space. But again Square is doing so much to step above, they even purchased Weebly in 2018 and use it to help small to medium businesses set up online platforms. If you would like to find out more about Square and investing follow us here, and if you would like to learn more about investing click here.