Fintech giant Square (SQ -0.49%) has produced market-beating returns for its investors as it has grown from a niche provider of credit card hardware into a massive financial ecosystem. In this Fool Live video clip, recorded on Sept. 20, contributors Matt Frankel, CFP, and Jason Hall discuss whether Square still has lots of growth potential. 

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Matt Frankel: This is Square; SQ and this is our number four (out of eight fintech stocks). Square was three for me, and the only reason it wasn't higher is because I had a bit of a negative list. I tried to list out pros and cons for these stocks -- that helps me determine my rankings and for Square I had few cons.

First, I'll just go through the numbers. Gross profit up 91% year over year. They're now generating over $1 billion of annual gross profit for the first time ever. The Cash App has been absolutely phenomenal for them. Forty million active users of the Cash App. Remember a couple of years ago when people thought they weren't going to be able to monetize the Cash App? Cash App revenue's up 128% annualized for the past two years. That's pretty impressive. Square is slightly profitable. They're not prioritizing profitability not in the way PayPal (PYPL -0.13%) is at the moment.

There's still in pretty much all that growth mode, but they have had positive net income the past four quarters. They're trading at something like 200 times earnings, so I don't consider them a very profitable business just yet. Gross payment volume, over $42 billion; much less than PayPal. This puts Square at about one-ninth the size of PayPal payment volume-wise.

Perhaps the most exciting to me, Square recently got it's own banking charters. They launched Square Financial Services. Right now they're just using that to rebrand their Square Capital or their business lending, but these are so many long-term implications for the business they can launch into personal lending, other specialized banking products that they haven't been able to this point. A while ago, Square then-CFO Sarah Friar had said that Square wants to essentially do for consumers anything their bank does. Square is along way from doing that, so there's still a lot of products or services in the pipeline.

Let's talk about the things I don't like about Square for a second, and I want to hear Jason's thoughts on these. Remember what I already alluded to this earlier a bit, the Afterpay acquisition. I think paying $29 billion to jump into the buy-now-pay-later business it's a little bit of a reach. They're paying 10 times more than PayPal is for its acquisition. Instead of trying to build anything organically, they're just adding this on. Now Afterpay adds $700 million or so of revenue to their ecosystem; so I get it, but this just seems like a hefty price to pay to add a financial service that I'm not totally sold on yet.

Number two, I have to say that Jack Dorsey's infatuation with Bitcoin (BTC 1.49%) is probably my least favorite thing about Square as a stock, and I own shares of Square. Out of Square's $4.7 billion of revenue, in the most recent quarter $2.7 billion of it was Bitcoin. They own Bitcoin on their balance sheet. A lot of their money is coming from Bitcoin right now. Jack Dorsey is really all-in on helping develop different types of blockchain networks, and applications, and things like that. I'm not a big fan of that, and it's a very richly valued company.

If you include the stock they're issuing for the Afterpay acquisition, you're approaching $150 billion in market cap right now. A big market cap for the company, I mentioned about ninth of the size of PayPal in terms of the payment volume they're doing, I think the Cash App is the real value in growth engine of the business at this point but curious to see why Jason ranked it number five.

Jason Hall: A few different reasons. I actually ranked Mastercard (MA 0.01%) ahead of it because I think at some point, you start thinking about just the risk of these concentrated bets. You talked about the Upstart (UPST 2.73%) play.

I agree, they're buying a brand here as much as anything, with Mastercard they're buying something that they can just integrate with their platform. I want to see Square doing the same thing, right now buying a brand. It could work out. It really could, but man, that's a huge reach. I think that the banking charter is both a wonderful opportunity to expand and diversify, and it also creates a tremendous risk because being a bank versus being a payments business are two really different things and the risks that you're managing are very different.

If they're effective with it and if they have the right people that come in that understand lending and taking on the risks that are involved; if they choose to use that bank charter for that thing which eventually I think they will, it could be good. It could also be a great way to destroy a lot of shareholder capital.

That, to me, I just think right now the downside risks have probably increased over the past year because of the concentration of Bitcoin trading driving so much of the revenues, because this massive capital that's now being invested into Afterpay, and because of the risks of the banking charter, because we know Jack Dorsey is not afraid to take a risk. That concerns me. I'm a shareholder and I'm not selling. I'm paying a lot more attention than it was a year ago.