Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Square Stock Is Soaring to a Fresh All-Time High on Tuesday

By Matthew Frankel, CFP® – Jul 7, 2020 at 11:49AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The fintech giant has more than doubled in 2020.

What happened

The stock market gave back some of Monday's gains on Tuesday, but if you looked at a quote of Square's (SQ -1.63%) stock price, you'd never know it.

As of 10:40 a.m. EDT, Square's stock was trading for almost $129 per share -- a gain of more than 8% on the day and a fresh all-time high.

Square Register POS terminal

Image source: Square.

So what

Today's move is just the latest in a sustained upward trend for the fintech stock. Square has gained 24% over the past week alone and 43% in the last month; it has more than doubled so far in 2020.

SQ Chart

SQ data by YCharts

In short, the COVID-19 pandemic seems to have accelerated the growth of cashless payments in brick-and-mortar retail stores, as well as among individuals. Square has done an excellent job of helping its merchants build out things like curbside service and online stores, and the company recently rolled out on-demand delivery service to Square Online Store sellers.

Square also has received some major analyst upgrades recently, which don't affect the business itself but have certainly helped to fuel the rally.

Now what

Square was already a pretty expensive stock by most valuation metrics before the recent rally, and that's especially true now. The stock trades for more than 11 times trailing-12-month (TTM) sales, despite not yet having reached consistent profitability. However, the company's opportunity is undeniable. If the Cash App user base keeps growing, Square's product offerings continue to expand, and the company is successful in building out its e-commerce seller base, there could be more upside potential ahead.

Matthew Frankel, CFP owns shares of Square and has the following options: short August 2020 $105 calls on Square. The Motley Fool owns shares of and recommends Square and recommends the following options: short September 2020 $70 puts on Square. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Block, Inc. Stock Quote
Block, Inc.
SQ
$54.99 (-1.63%) $0.91

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
332%
 
S&P 500 Returns
104%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/30/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.