Is Sqaure a Good Investment?

PHOTO CREDIT: Square

OVERVIEW

Square Incorporation is a company based in the United States. The company operates a financial technology company around the world. The company designs, manufactures, and sells the hardware and software needed for companies to make digital transactions. The company also operates the Cash App and also the website designer, Weebly. The company was founded in 2009.

Why You Should?

1. Square Incorporation is a great reopening play in an investor’s portfolio. The pandemic has crushed small businesses and have also led to a drop in some transactions through Square’s platform as well. Once the pandemic is over, these transactions will continue to rise and small businesses will be able to invest money into Square’s hardware and software as well.
2. Square has an extremely good brand recognition amongst small business owners who want to modernize their transaction systems. In fact, this pandemic has further sped up this growth. This strong brand recognition and loyalty will allow Square to retain and gain new customers. This will also benefit investors in the company.
3. In my opinion, I think that digital and mobile transactions instead of using cash will become the future of the financial industry. Square is at the forefront of this industry as it manufactures hardware and software in order for companies of all sizes to take digital transactions and credit/debit cards. These growth opportunities will benefit the company and its investors.
4. Square is a part of a growing industry as I have mentioned before. The financial technology industry will continue to rapidly grow across the world. One of the reasons why this will happen is because of younger consumers and business owners will be utilizing technologically advanced methods like Square to pay and receive transactions. This will benefit the company and its investors.
5. The company has seen rising revenues and profits over the past couple of financial years due to the reasons mentioned above. This has helped the company grow across all of its markets and has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 9.5 billion and profits of around 213 million. In the financial year of 2019, the company reported lower revenues of around 4.71 billion but hugher profits of around 375 million.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. Square faces tough competition from many other companies around the world. Some of these companies include Visa, Mastercard, PayPal, as well as Google and Apple Pay. This competition might hurt the company and its investors in the future.
2. The COVID-19 pandemic has hurt small businesses, who do not have the money in order to upgrade their transaction systems to Square. Furthermore, Square has seen lower transaction volumes at some of these locations (but the company has still seen surging popularity and skyrocketing transactions despite the pandemic). These impacts will hurt the company and its investors in the short to mid-term.

MY OPINION

I think that Square is a great company to invest in. This is because of its position as a good reopening play in an investor’s portfolio, good brand recognition, its position as the future of financial transactions and a growing industry, as well as its history of rising revenues and profits. However, tough competition and impacts from the pandemic might hurt the company in the future.