Square (NYSE:SQ) is known to many traders as a digital payments company. In fact, it’s an established leader in this niche. As such, some folks might choose to own SQ stock just for that reason.
Now, don’t get me wrong — Square’s Cash App did drive outsized profits in early 2021. That’s worth discussing, certainly. But there’s also another angle to consider here, one that should be particularly interesting for cryptocurrency enthusiasts.
Not everyone thinks of SQ stock as a way to invest in the Bitcoin (CCC:BTC-USD) mining niche. Likewise, probably not very many people think of renewable energy when they think about Square.
Starting today, though, you might have a different idea of what Square does — and how diversified this company has become.
SQ Stock at a Glance
There’s no denying that SQ stock has rebounded sharply during the recovery from the pandemic. Back in March 2020, Square shares bottomed out near $36 or so. But after that, there was a powerful rally that persisted into early 2021.
This culminated in SQ stock reaching a 52-week high of $283.19 on Feb. 16. Following such a steep run-up, it’s understandable that buyers had to take a breather. Consequently, the stock chopped around over the next few months. As of June 14, though, SQ stock opened for trade at about $223.
Pullbacks should be viewed as natural and expected, especially after an extended rally. Now, SQ stock could certainly revisit $283 — and that could even happen this year.
But it’s also worth mentioning that Square investors should keep an eye on the Bitcoin price. The company’s crypto connection — which we will address soon — means that the BTC could influence this name’s shares quite a bit.
Cashing in on Cash App
Fiscally speaking, Square’s performance during the first quarter of 2021 was unassailable.
We can prove this point by breaking down the essential stats. For Q1 2021, Square’s net revenues totaled $5.06 billion, representing a whopping 266% year-over-year (YOY) increase. Also impressive was the company’s quarterly gross profits of $964 million, which signifies a YOY improvement of 79%.
As InvestorPlace contributor Mark Hake explains, Square makes money by “charging transaction fees on its gross payment volume,” or GPV. For Q1, the company recorded quarterly GPV of $33.1 billion, an increase of 29% YOY.
However, perhaps the most interesting SQ stock highlight of Q1 2021 was the company’s Cash App performance. Impressively, Square’s Cash App generated gross profits of $495 million for the company, up 171% YOY.
This shows that, even if Square is delving into other areas of business, there’s no denying that Cash App is the company’s bread and butter. It’s worth noting, though, that there is a definite crypto connection with Cash App as well. Square noted the following about the app in its shareholder letter:
“We offer customers the unique ability to send bitcoin to friends and family directly within Cash App instead of leaving the platform or locating a bitcoin wallet address.”
Mining for Solar-Powered Profits
As I alluded to earlier, however, there’s more to SQ stock than Cash App alone.
For example, the company reportedly just teamed up with a digital asset infrastructure company “to build an open-source, solar-powered Bitcoin mining facility.” This facility will be located in the U.S. and Square “intends to invest [$5 million] in the facility.” Meanwhile, Square’s partner offers the necessary expertise and infrastructure to build and manage the project.
It has been said that this facility “will be a proof-of-concept for a 100% renewable energy Bitcoin mine at scale. Furthermore, the deal aims to demonstrate “that a renewable mining facility in the real world” is possible while also proving “empirically that Bitcoin accelerates the world toward a sustainable future.”
With Square bolstered by its steady revenue elsewhere, it will be interesting to see how this ambitious vision plays out and diversifies the company. Some have criticized Bitcoin mining as far too energy-consuming, so SQ could prove to be an early investor in a high-growth market with this sustainable crypto-mining venture.
The Takeaway on SQ Stock
So, there’s no doubt about it: Cash App is highly lucrative for Square and SQ stock. Moreover, fiscal data generally shows that digital payments should continue to be a major part of Square’s business model.
Yet, this company is also becoming more diversified with its investment in “clean” cryptocurrency mining. It’s a bold move, for sure — but also one that could provide tremendous value for the long haul.
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On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
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