by Ian Harvey
August 19, 2020
Square shares are up 120% so far this year due to several positive factors – hedge fund participation, analysts’ upgrades, new Cash App payments services, GPV growth, promising seller ecosystem and a sound earnings report.
And, Stock Options Made Easy “Cut-to-the-Chase” Members are well-positioned to continue to benefit; and are already up 114% in less than a week based on a CALL OPTIONS trade.
More is expected!
Square shares are up about 120% in 2020.
Is it too late to buy Square stock? Find out below!
Square stock recently soared to an all-time high after its second-quarter numbers soundly beat analysts' estimates.
One of the most powerful growth trends we're going to witness in the years ahead is the push toward cashless transactions. While Visa and Mastercard will continue to play a vital role in facilitating the move to credit- and debit-based transactions, it's Square that offers the most promising growth and share price upside.
After its disappointing initial public offering in November 2015, Square stock meandered. In June 2016, SQ stock still traded just above its IPO price of 9.
That soon changed. From July 1, 2016, through a high of 101.50 set last Oct. 1, Square stock exploded nearly 995%. Its big run led one analyst to call Square the next FANG stock, joining the likes of Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Alphabet's (GOOGL) Google in stature.
Following its big run, Square stock fell more than 50% in late 2018 as many technology companies also crashed. SQ stock clawed back a bit the first seven months of 2019. After Square issued weaker-than-expected September quarter guidance on Aug. 1, shares plunged 15% in a day and then gradually rose until February of this year, when it plunged again.
It's not uncommon for big winners like SQ shares to correct more than 50% after scoring a huge run. However, not many stocks roar back after such a run and steep correction. It takes time for them to digest those gains and set up for another extended surge into new highs. Many never deliver a repeat performance.
Winning Options Trades on Square This Year.....
1. Armchair Traders executed a trade on Square on January 08, quickly made 100%; and for those traders that held for more gains – reached a maximum of 300%.....CLICK HERE for more information.
2. Armchair Traders executed a trade on Square on May 22 and made Potential Profits of 680%......entered at $9.00 then hit $70.20 after the report.....CLICK HERE for more information.
4. “Cut-To-The-Chase” Members executed a trade on Square on August 10 and made Potential Profits of 114% so far......entered at $3.05 then hit $6.54.....CLICK HERE for more information.
Factors Driving Square Shares Higher…..
Dan Loeb's Third Point hedge fund has started a new position in Square stock, buying 800,000 shares during the quarter that ended on June 30. Third Point's strategy appears as if investors are imitating and buying Square shares.
Investment bank JPMorgan just came out with a new price target on Square shares. Saying it likes "proven scale players" and calling Square in particular a "digital winner" in the payments and processors sector, JPMorgan raised its price target to $172 per share and reiterated its "outperform" rating on the shares.
Cash App Payments
Square announced last week that its Cash App payments service is testing a new feature that will allow users to take small, short-term loans that could represent a challenge to the payday loan industry.
The fintech company is currently making the option available to about 1,000 users during the initial testing phase but may roll the feature out to a greater number of users if it deems the experiment to be a success.
"We are always testing new features in Cash App, and recently began testing the ability to borrow money with about 1,000 Cash App customers," a Square spokesperson said in a statement. "We look forward to hearing their feedback and learning from this experiment."
Square has continued to expand the features available from Cash App beyond its roots as a peer-to-peer money transfer service, similar to PayPal's Venmo. Cash App also offers Cash Card (its no-cost debit card), Cash App Investing, and rewards via Cash Boost.
Square also offers a full ecosystem of products and services for its customers, including payroll apps, business debit cards, small business loans, customer loyalty programs, and online stores.
Square doesn't just focus on businesses, though. Its Cash App peer-to-peer payment platform has become a huge growth driver for the company, reporting more than 30 million active customers using Cash App in June.
Gross Payment Volume (GPV)
The company's seller ecosystem has seen gross payment volume (GPV) on its platform grow from $6.5 billion in 2012 to $106.2 billion in 2019 – up 49%.
Even with GPV likely to take a hit in 2020 due to the pandemic, there are two trends to suggest that Square's seller ecosystem is still in great shape…..
The company added bitcoin trading to its Cash app about two years ago. To generate a slight profit from each sale, Square buys bitcoin to fulfill an order and adds a small margin to bitcoin's market price.
Two catalysts sparked Square's explosive bitcoin growth…..
Square shares recently soared to an all-time high after its second-quarter numbers soundly beat analysts' estimates.
The fintech company's revenue surged 64% annually (70% after excluding the divestment of Caviar) to $1.92 billion, clearing the consensus forecast by $790 million. Its adjusted EBITDA dipped 7% to $97.9 million, but earnings of $0.18 per share still beat expectations by $0.23.
Square didn't provide any guidance for the third quarter or full year. But during the conference call, CFO Amrita Ahuja said Square saw "impressive growth in Cash App and signs of stability in our seller ecosystem" in July with "more than 200%" annual growth in Cash App's gross profit and continued "momentum from the second quarter."
Ahuja noted the Cash App saw its "highest monthly increase in net new transacting actives and an increase in new product adoption" during the third quarter, which suggests it will remain a major growth engine for Square shares even after its merchant-based transaction business recovers.
Will Square Shares Continue To Rise?
Is It Too Late To Get In On The Action?
Will We Recommend Another Square Options Trade?
What Other Trades Are We Anticipating?
Do You Wish To Be Part Of This Action?
Join us here at Stock Options Made Easy, and find out our trades moving forward.
An Important Note: That any suggestions for options trade considerations require investors/traders to use their own discretion as to when to enter or exit! As well, it is advisable to do further research and due diligence before executing your trade.
It is sometimes best to exit a trade, if there is already sufficient profit accrued, before an earnings report is presented. GREED can be the undoing of a nice profit!