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Why Square Stock Popped 7.9% on Friday

By Travis Hoium - May 7, 2021 at 1:58PM

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It was another great quarter from Square.

What happened 

Shares of digital financial stock Square (SQ -0.76%) jumped as much as 7.9% in trading on Friday after reporting first-quarter 2021 financial results. The stock held steady most of the day and is up 5.6% at 1:10 p.m. EDT. 

So what

Total revenue jumped from $1.38 billion a year ago to $5.06 billion, primarily on the back of a more than ten-fold increase in Bitcoin (BTC -2.86%) revenue to $3.51 billion. Transaction-based revenue was up 26.6% to $959.7 million, and subscription and service-based revenue jumped 88.3% to $557.7 million.

Person paying for bike equipment with Square.

Image source: Square.

Gross profit jumped 79% versus a year ago to $964 million, and net income was $39 million versus a $106 million loss a year ago. 

The Bitcoin numbers complicate the financial report and analyst estimates. But analysts were expecting $3.3 billion in revenue, so the company easily surpassed that. And Square's adjusted earnings per share, which pulls out one-time items, of $0.41 topped the $0.17 analysts expected. 

Now what

For Square, the great news is that both businesses and consumers are using its products at a growing rate. Gross payment volume through the seller network increased to $29.8 billion from $22.0 billion a year ago, and the Cash App ecosystem is growing with inflows into customer accounts growing 55% between February and March alone. And with 7 million people using their Cash Card each week, Square is becoming a key to consumers' financial lives. 

As Square intertwines itself with businesses and consumers, it will be a disruptive force in financial markets. And that's why the stock continued its strong run today. 

Travis Hoium owns shares of Square. The Motley Fool owns shares of and recommends Bitcoin and Square. The Motley Fool has a disclosure policy.

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