DCG Posted December 16, 2015 Share Posted December 16, 2015 Haven't done much research on Square yet, but they seem to be getting a lot of traction in smaller retailers, coffee houses, food trucks etc.. In addition to payment processing, they are starting to get info invoicing, payroll, cash advances, appointment scheduling, and more. This could be good or bad - It can create new revenue streams and retain customers, but it can take them away from their focus as a payment processor. They have over two million merchants using them, and their payments business has around 30% margins. Jack Dorsey is CEO of both Square and Twitter at the same time, which can be challenging. Anyone dig into Square? Link to comment Share on other sites More sharing options...
johnny Posted December 16, 2015 Share Posted December 16, 2015 Haven't looked at the financials at all, but are you familiar with the Starbucks/Square partnership? Everything about that deal that I've heard really is quite unflattering to Square. They basically agreed to process payments for Starbucks at a loss, for some strategic reason that isn't very obvious and, judging by the termination, doesn't seem to have panned out. As you say, they are moving from payment processing into an assortment of small business software solutions. I'm less concerned that this has the potential to "distract" them, and more concerned that this is a very strong signal that they don't see a future strong competitive position in the payments space. When I think of all the giants in the space, I ask, "Do any of them have a reason to ally with Square, specifically?" and the answer seems to be no. I don't think any legacy financial institutions really want a payment intermediary controlling a substantial chunk of transaction flow. And Apple, Google, and all of the tech players in the space probably see Square's position was a glossy version of a legacy industry. Apple is happy to cooperate with Square and allow Square to market a NFC-reader as Apple Pay compatible, sure. But in this instance Square is simply providing the low-level hardware distribution and tech support for somebody else's next generation payments infrastructure. I don't expect to see extraordinary returns there. Just some thoughts off the top of my head. Would be interested in hearing everyone else's. Link to comment Share on other sites More sharing options...
racemize Posted December 16, 2015 Share Posted December 16, 2015 I think square is largely strong for very small companies. I've been helping out with a massage therapy business--prior to square, all they had was an old credit card reader. Square is only a little more costly and definitely worth the switch. It also really improves tips, because of the extra tip screen you can add. Generally, it is clear that Square is still in start-up mode. Lots of stuff that should or could work better don't, but what they do provide works pretty well. So far, it has not really provided anything close to compelling services outside of taking payments, but perhaps they will get to it. Right now, square is aggressively sending out emails to lend capital to small businesses, which I believe, are paid back from the credit card payments. Maybe that's clever, but the emails just seem distasteful to me and more of a clear grab for money in the short-term. I think they could be so much more of a compelling a service if they expanded what they were doing, e.g., providing good interfaces for payroll, appointment systems, etc. Anyway, random anecdotal thoughts. Link to comment Share on other sites More sharing options...
johnny Posted December 16, 2015 Share Posted December 16, 2015 Do you have any insight into why they chose Square over something else? How long have they been using it? Amazon tried to get into the space with some pretty aggressive introductory pricing, but they have decided to abandon the effort. That's either a great or terrible sign for Square... Link to comment Share on other sites More sharing options...
racemize Posted December 16, 2015 Share Posted December 16, 2015 Do you have any insight into why they chose Square over something else? How long have they been using it? Amazon tried to get into the space with some pretty aggressive introductory pricing, but they have decided to abandon the effort. That's either a great or terrible sign for Square... Square has pretty big mindshare right now for small businesses I think. They picked it because that's what they knew and saw people using. Who else is there? I think paypal has an app. I don't remember Amazon at all, so I guess I missed that. And honestly, you are only giving up maybe 50 bp to switch from a terrible credit card machine to Square or whoever else. It's really an easy decision. I think it's been about 6 months of using it. Now that everything is set up with it, there would have to be a compelling reason to switch away from it. There are several things that could be compelling though--e.g., better reports on transactions is the major thing. Square is really screwing up by not allowing for more custom reports I think. Link to comment Share on other sites More sharing options...
DCG Posted February 12, 2016 Author Share Posted February 12, 2016 Visa took a 10% stake in Square. Interesting. Edit: Sounds like they've actually had this holding since 2011, but it's just becoming public info now? http://finance.yahoo.com/news/visa-now-owns-big-chunk-005223774.html Link to comment Share on other sites More sharing options...
orthopa Posted February 12, 2016 Share Posted February 12, 2016 Visa took a 10% stake in Square. Interesting. Edit: Sounds like they've actually had this holding since 2011, but it's just becoming public info now? http://finance.yahoo.com/news/visa-now-owns-big-chunk-005223774.html No they had an initial stake but bought more after the IPO. I like this move by Visa. Concerns by many are that Visa is going to get replaced by competitors/block chain etc. This gets Visa foot in the door so to speak with a smaller competitor and a good way to get a pulse of what a small business wants or needs. Not sure if Visa wants to get into all of what square has to offer with the small business software but allows them to keep better tabs on what seems to be a rapidly changing entity. Not sure if widening its moat is the right term as blockchain may narrow it the most but gives Visa a peek into what is going on at Square. Thoughts? Link to comment Share on other sites More sharing options...
ICUMD Posted November 10, 2017 Share Posted November 10, 2017 Is anyone following this stock - some impressive share price increase now at ~$40. Great concept and increasing user base. I haven't dug into the valuation aspects as yet. Link to comment Share on other sites More sharing options...
Nomad Posted November 10, 2017 Share Posted November 10, 2017 Is anyone following this stock - some impressive share price increase now at ~$40. Great concept and increasing user base. I haven't dug into the valuation aspects as yet. I have looked at it but have not taken a position. The product is very sleek and makes payments pretty easy. I have mostly encountered the platform at yuppie coffee shops and other such businesses. Whether or not it can scale and achieve mass market penetration, or whether it languishes and becomes the next Apple Pay is anyone's guess. I like the product but the business itself is in my "too hard" pile. I already own Visa and figure I have exposure to Square through that anyway. Link to comment Share on other sites More sharing options...
Junto Posted November 10, 2017 Share Posted November 10, 2017 They are being relatively adept at using their mind share to grow into very hot businesses right now (merchant lending is the particular one of interest). I need to look closer as much as Jack has missed his pivots on Twitter, he has hit well at Square. If you look at growing financial services in the Inc 500 over the past several years, it has almost always been populated with the merchant advance and now small biz lenders. He is seeing this growth and Square has pivoted right into it. Link to comment Share on other sites More sharing options...
lucasnascimento Posted September 11, 2019 Share Posted September 11, 2019 Honest question: why doesn't Square try to make their own accounting software to compete with Quickbooks? It seems to be a very high margin business, and it appears to be easy to cross-sell it to their platform's customers. Maybe I don`t really understand the moat around accounting software or how painful it can be to develop this kind of software. Does anybody have a clue? Link to comment Share on other sites More sharing options...
villainx Posted September 13, 2019 Share Posted September 13, 2019 No idea, but as they've been expanding offerings/solutions, seems like there's more lines that they can get into. Maybe focusing on bank biz? To expand to mid+ size business and retain growing business? Link to comment Share on other sites More sharing options...
winjitsu Posted September 17, 2019 Share Posted September 17, 2019 Honest question: why doesn't Square try to make their own accounting software to compete with Quickbooks? It seems to be a very high margin business, and it appears to be easy to cross-sell it to their platform's customers. Maybe I don`t really understand the moat around accounting software or how painful it can be to develop this kind of software. Does anybody have a clue? Because accountants / bookkeepers choose the software and there's high switching costs and customer (technical skills) lock in. Link to comment Share on other sites More sharing options...
Spekulatius Posted September 17, 2019 Share Posted September 17, 2019 Honest question: why doesn't Square try to make their own accounting software to compete with Quickbooks? It seems to be a very high margin business, and it appears to be easy to cross-sell it to their platform's customers. Maybe I don`t really understand the moat around accounting software or how painful it can be to develop this kind of software. Does anybody have a clue? Because accountants / bookkeepers choose the software and there's high switching costs and customer (technical skills) lock in. There are also synergies with Intuits tax software. I think SQ could lock in merchants that are just starting out on SQ payment platform, if they offer book keeping capabilities on their software suite. I think SQ could end up running a Mickey Mouse ERP System for small companies/ merchants starting out. The stock is not cheap by any means (no position) but I like what the company is doing and started to track it. Link to comment Share on other sites More sharing options...
villainx Posted September 17, 2019 Share Posted September 17, 2019 Just going by sentiment, fairly negative now. So ... traditional investment clique, good time to look more closely. Link to comment Share on other sites More sharing options...
HJ Posted April 20, 2020 Share Posted April 20, 2020 Pretty impressive the stock holds at this level. Would have thought the nature of the client base should make it more vulnerable than typical. Compare this with, say, something like Paychex, just seems to be quite out of line. I don't have great insight on the competitiveness of their suite of products, but feels like SME focus, with heavy restaurant exposure should make this quite vulnerable in the current environment? Link to comment Share on other sites More sharing options...
glorysk87 Posted April 21, 2020 Share Posted April 21, 2020 Pretty impressive the stock holds at this level. Would have thought the nature of the client base should make it more vulnerable than typical. Compare this with, say, something like Paychex, just seems to be quite out of line. I don't have great insight on the competitiveness of their suite of products, but feels like SME focus, with heavy restaurant exposure should make this quite vulnerable in the current environment? Add it to the long list of names that are trading at levels that make absolutely no sense Link to comment Share on other sites More sharing options...
JayGatsby Posted April 21, 2020 Share Posted April 21, 2020 As a small business owner, their product is the best. Everything about it is easy, rates are reasonable and straightforward. We don't even really have to train our employees on how to use it. You'd think it would get more competitive, but it doesn't seem to. Having said that, as an investor their valuation seems rich. Our business is doing $0 of revenue, so Square gets $0 revenue from us. Their core customer isn't doing much better than we are. Stripe has done a better job of gaining market share online for some reason. Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now