Besting investor expectations and diversifying its services have seen the fintech company do extremely well.
The post The Square (NYSE:SQ) share price has gained 80% over the last year appeared first on The Motley Fool Australia. –
The Square Inc (NYSE: SQ) share price has surged in the last 12 months. While the S&P 500 Index is up 33% in that time, Square shares are 80% higher. That means Square outperformed the market by just under 50 percentage points.
There are going to be many ASX investors who will want to know more about the company after it agreed to buy Afterpay Ltd (ASX: APT) shares in scrip. Square will acquire 100% of Afterpay shares at an exchange rate of 0.375 Square shares for every 1 Afterpay share.
At market close in the US, Square shares were trading for US$247.26. This was down 3.14%.
Let’s take a look at some of the stories that have seen the Square share price accelerate over 52 weeks.
What’s seen the Square share price rise?
New products and acquisitions
Afterpay isn’t the only acquisition Square has made in the year. Back in November, the fintech company bought the tax unit of Credit Karma. The purchase, for US$50 million cash, for the free tax-filing service sent the Square share price up 5% on the day. Square integrated the filing service into its Cash App business.
In a statement, Square said the purchase of the service would:
…expand Cash App’s diverse ecosystem of financial tools — which currently includes peer-to-peer payments, Cash Card, direct deposit, as well as fractional investing … giving customers another way to manage their finances from their pocket.
Only last week, Square shares jumped 11% when it announced a suite of new products. These included checking, saving, and business financing banking services. Shares leapt another 7% in September last year when it launched a service to allow workers to access their earned wages before they physically receive their pay.
With its latest expansion into buy now, pay later (BNPL), Square is looking to diversify even more. Let’s see what this will mean for the Square share price going forward.
Earnings and expert analysis
On the release of its third-quarter earnings report, the Square share price rocketed 11% to a then all-time high.
Net revenue grew 140% year-on-year to more than US$3 billion. The Cash App alone generated US$385 million in gross profit for the group. This was a 300% increase on the prior corresponding period (pcp). Gross profit grew 63% on the pcp – its biggest growth rate in at least three years.
Japanese bank Mizuho sent the Square share price soaring 5% last August when it slapped a buy rating on Square. At the time it said shares could reach as much as US$225 from its then price of US$158. As stated, Square shares are above that price target, currently trading for around US$247.
As well as phenomenal growth over the year, its growth longer term has been mind-boggling. In the last 5 years, the Square share price has exploded by more than 2,100%.
Square Inc has a market capitalisation of $153 billion AUD.
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Returns as of 15th February 2021
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended AFTERPAY T FPO and Square. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.