Jack Dorsey’s “other” company, Square (NYSE:SQ) is doing quite well these days. Square stock is up over 210% in the last 12 months. At the onset of the Covid-19 pandemic, some were skeptical about Square. After all, the company relies on its Square Readers that are used by brick-and-mortar stores and the holders of in-person events.
Square, however, proved to be far stickier than first thought. Much of that was due to the company’s Cash App which became one of the most downloaded apps in the United States in 2020. The app allowed users to receive their tax refunds and stimulus checks. And it also enabled them to trade stocks.
Square also has a Cash Card that supports the Cash App. Like PayPal’s (NASDAQ:PYPL) debit card, the Cash Card allows consumers to simply leave their money in the Cash App. This in turn benefits Square, as over $1 billion of user funds are now held in the Cash App.
As we become an increasingly cashless society, the Cash App is just one catalyst that Square will have when the pandemic ends. Another is the company’s adoption and promotion of bitcoin. However, while Square stock just got a nice bump from rising bitcoin prices, cryptocurrency is, for now, not a key reason to buy Square.
Square Will Benefit From Strong Trends
As trying as the pandemic has been, it has provided certainty for investors. The winners and the losers have been consistent and easy to spot. Square stock was one of those winners. As we head into what will hopefully be a post-pandemic world, analysts are left trying to determine who the next winners will be.
Some believe that Square’s business might be negatively affected when the pandemic ends. But that misses the point: Square wins wherever customers shop.
Square has already adapted to a digital environment with Square Online. One attractive feature of the product is that it allows customers to opt for a pay-as-you-go model in which they only pay a per-transaction fee. And it also gives consumers tiered premium options.
Even when the pandemic ends, e-commerce will continue to have momentum. Yes, people will be eager to attend outdoor events. However, the pandemic has now forced some consumers to use e-commerce in ways they would never have done otherwise. And that trend should continue to some extent after the pandemic, providing an ongoing, positive catalyst for Square Online.
And when consumers do begin attending live events again, Square can accommodate vendors with its Square Readers. These devices allowed merchants to process payments remotely. Now in-person events and many more brick-and-mortar customers will be back in play for Square.
Square Is Accepting Bitcoin
In Oct. 2020, Square announced it was purchasing $50 million of bitcoin. Square founder Jack Dorsey is bullish on cryptocurrency in general and bitcoin in particular. According to Dorsey, bitcoin will become the only currency in the world within the next decade.
Prior to that purchase, Square had been allowing users to exchange bitcoin via its Cash App since 2018. When bitcoin surges as it has recently, Square stock can climb as well. Of course the opposite is true as well.
The fact that Square is allowing its customers to pay with bitcoin may be the greatest thing to ever happen to the stock. But let’s not count on that, at least not right now. However, with or without a big cryptocurrency boost, Square stock will be a winner.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for seven years. He has been writing for Investor Place since 2019.