Please ensure Javascript is enabled for purposes of website accessibility

This Is Why Square's Earnings Were So Strong

By Jose Najarro - May 8, 2021 at 6:00AM

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

Square just reported earnings, and the stock price is up. Is it time to sell or hold long term?

In today's video, I look at Square (SQ -5.04%). The company just reported earnings, and the stock price is up. Below I share why I believe Square's earnings were strong. 

Three reasons Square's earnings were strong: 

  1. Seller ecosystem gross profits are up 32% year over year, and are also up quarter over quarter. Gross payment volume (GPV) is also increasing. For Q1 2019, it was $22 billion, for Q1 2020 it was $24.7 billion, and for Q1 2021 was $29.8 billion. The most significant growth of GPV is coming from the development of sellers with more than $500,000 in annualized GPV.
  2. Square continues to innovate methods to drive users from the seller ecosystem to the Cash App ecosystem and vice versa. The most recent example is integrating the Square Loyalty Program with Cash App. This integration not only creates a flywheel effect for seller and buyer discovery, but it is also meant to increase engagement and retention of Square products.
  3. The Cash App gross profits are up 171% year over year, and are also up quarter over quarter. The strength of the Cash App business has made this segment's gross profits more than 50% of the company's total gross profits.

Click the video below for my full thoughts. 

*Stock prices used were the premarket prices of May 7, 2021. The video was published on May 7, 2021. 


 

Jose Najarro owns shares of Square. The Motley Fool owns shares of and recommends Square. The Motley Fool has a disclosure policy. Jose is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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
$75.70 (-5.04%) $-4.02

*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
397%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/19/2022.

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.