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Geant
2021-06-22
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Square: Winner Takes Most
Geant
2021-06-21
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FAANG Stocks In First-half: Last Year's Laggards Google, Facebook Come On Top As Apple, Amazon And Netflix Fall Off
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and comment thanks","listText":"Like and comment thanks","text":"Like and comment thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/129944367","repostId":"1188931868","repostType":4,"repost":{"id":"1188931868","kind":"news","pubTimestamp":1624352654,"share":"https://ttm.financial/m/news/1188931868?lang=&edition=fundamental","pubTime":"2021-06-22 17:04","market":"us","language":"en","title":"Square: Winner Takes Most","url":"https://stock-news.laohu8.com/highlight/detail?id=1188931868","media":"seekingalpha","summary":"Summary\n\nArguably the most important fintech metric is customer acquisition cost (CAC). Square’s mas","content":"<p><b>Summary</b></p>\n<ul>\n <li>Arguably the most important fintech metric is customer acquisition cost (CAC). Square’s mastery of viral marketing results in the lowest CAC in the digital wallet space. This is a moat.</li>\n <li>Square is building massive ecosystems in Cash App and Seller that are just beginning to overlap, which results in massive cross-selling opportunities and network effects.</li>\n <li>Square banking is a major catalyst that has not received sufficient attention from analysts or investors.</li>\n <li>Square has spent an entire year building as-of-yet unannounced Square Checking and Square Banking products. This is a shot across the bow at incumbent banks, and indicates Square is ready for a higher level of fintech warfare.</li>\n <li>Square’s future relationship with crypto remains undercooked, and Dorsey’s overfocus on Bitcoin to the exclusion of alternative coins is an uncommon mistake.</li>\n</ul>\n<p><b>Square's Investment Thesis</b></p>\n<p>When I begin researching a company for an article, I always start with the CEO. For as much as I know about balance sheets and technical analysis, it is the CEO that I am most critical and analytical about.</p>\n<p>This is reflected in the types of companies I invest in and write about. Opendoor (OPEN), SoFi (SOFI), Zillow (Z) and Palantir (PLTR) are each led by visionary CEO’s, with colorful histories who make massive contributions to their industries. In my opinion, the story behind these disruptive companies and the CEOs who lead them can inform investment decisions as surely as an earnings report.</p>\n<p>Writing this article began no differently. Jack Dorsey, the $15 Billion dollar man who leads both Square (SQ) and Twitter (TWTR), is one of Wall Street’s biggest eccentricities. He has a penchant for meditating, facial hair, intermittent fasting, 80+ minute morning walks and wields an invisible armor that has allowed him to endure a decade of investors ranting he over-focuses on Square to the detriment of Twitter (sorry Twitter longs).</p>\n<p>Today, we will dive into Square – its competitive advantages over neo-banking peers and incumbents alike, Square's banking opportunity, as well as an update on Square’s cryptocurrency initiatives. Square is the best positioned company in the digital wallet space, and Jack's advertising expertise gained by founding and running Twitter has allowed Square to deploy viral marketing campaigns to fuel absurd growth in Cash App. Cash App's success is rivaled only by Square's Seller ecosystem, and these two businesses are just beginning to combine, interact and compound.</p>\n<p>We're going to talk about all of this here. But first, I want to share a story about how a young Square, in its first years as a company, suffered a direct Amazon (AMZN) salvo and somehow emerged stronger.</p>\n<p><b>How Square Survived An Amazon Siege</b></p>\n<p>Bookstores, brick and mortal retail, supermarkets, meal-kits, enterprise cloud, the list of industries Amazon has bled out and internalized stretches on.</p>\n<p>Amazon has earned the moniker, “The Death Star.”Bought and paid for it. Over the past two decades no other company has so pervasively and efficiently disrupted legacy industries.</p>\n<p>As a brief anecdote, in his early days at Amazon, CEO and founder Jeff Bezos was always searching for ways to eliminate company overhead. In his mind, the less Amazon spent on operations, the more savings could be passed on to Amazon customers.</p>\n<p>In this vein, instead of purchasing a fancy desk for his office, Bezos built his own out of a recycled door and some two by fours. This practice caught on, and Amazon's employees participated broadly by building their own desks out of wooden doors.</p>\n<p>The wooden door initiative served two purposes: 1) it was a cultural commitment to humility, from the top down, and 2) it emphasized the importance of spending money only on initiatives that improve the customer experience.</p>\n<p>There's a picture of Bezos working away on his door deskhere. I’m tempted to frame this photograph, and I probably would if my fiancé would let me. Just confirmed, she says no. But I love this combined concept of customer obsession and frugality.</p>\n<p>From a capital allocation, leadership, and customer-centric perspective, it’s easy to look back now and recognize how Amazon became the goliath it is today. Bezos may not look it, but he is a ruthless, patient CEO whose basilisk gaze you pray doesn’t fall on your industry.</p>\n<p>So when Amazon turned its cannons on a private, relatively small payment processing company named Square in 2014, you didn’t have to be a rocket scientist to know who would be left standing after the dust settled.</p>\n<p>But if you assumed it would be Amazon, you would have been wrong.</p>\n<p>“Amazon Register” was built to kill Square. It undercut Square’s pricing by 30% and offered live customer service (which Square did not have). Even by Square co-founderJim McKelvey’s own admission, Amazon’s product worked better than Square’s ‘dongle’ did (I hate that word as much as you do and I promise to not use it again).</p>\n<p>But Square survived. Thrived in fact. Square continued to execute along the same playbook, launched new features like Square Capital to the innovation stack, and grew roughly 10% week over week that year. Amazon, for all its strength, could not compete with Square in offerings, and small businesses were understandably skeptical about partnering with Amazon.</p>\n<p>After the year-long siege, on October 30, 2015, Amazon gracefully bowed out, announcing they were shuttering Amazon Register. When the hardware was officially discontinued in early 2016, Amazon mailed a white Square card reader to each of its business customers.</p>\n<p>And the rest is history.</p>\n<p>Since Square’s IPO in 2015, the company has continued to fend off fearsome competitors such as Intuit (INTU), PayPal (PYPL), and Shopify (SHOP), not to mention the largest banking systems in the world. Square has ridden a wave of timely and engaging financial innovations to a market cap of $107 Billion at the time of this writing. Cash App’s growth has been an absolute rocket ship, and Dorsey is delivering on the long term vision of connecting Seller and Cash App to one, unified ecosystem.</p>\n<p><b>Square’s Moat: Customer Acquisition Cost</b></p>\n<p>In the banking space, the company that optimizes lifetime value [LTV] vs customer acquisition cost [CAC] is the company that wins.</p>\n<p>Read that again, write it down, bold it and underline it.</p>\n<p>This is not supernatural. Behind the B-school terminology is a basic principle of unit economics: make more from a customer than it costs to acquire them, and do it better than competitors.</p>\n<p>Of all the participants in the banking ecosystem, I believe Square has the lowest customer acquisition costs. This is a major part of the Dorsey value proposition, and misunderstood.</p>\n<p>As founder and CEO of both Square and Twitter, Dorsey has been able to leverage his incredibly nuanced understanding of viral communication to inform viral marketing. Starting in 2017, Twitter mediated campaigns like #CashAppFriday, in which Square offers thousands of dollars to Twitter users who post their Cash App handle, has drawn massive numbers of comments, retweets and Cash App downloads. Partnerships with engaging content developers like the Joe Rogan Experience, Lex Fridmen, Burger King, Travis Scott and Lil B have continued to drive brand awareness. This brand awareness is critical, especially in a crowded digital banking space.According to this study, 82% of app or internet searchers choose a familiar brand for the first click.</p>\n<p>As an example of viral and opportunistic marketing, in 2018 a prominent content creator on TikTok, “Shiggy” released a SoundCloud song about Cash App. After striking a sponsorship deal with Shiggy in 2019, the Cash App marketing team edited a shorter version of the single, and reached out to TikTok influencers with the below message:</p>\n<blockquote>\n Create a TikTok with your best interpretation of the catchy song in everyday situations. And use hashtag #CashAppThatMoney.\n</blockquote>\n<p>Source:Business Insider</p>\n<p>To date, the Shiggy Cash App song has beenused in 9,138 videos. Prominent TikTok influencers such as Addison Rae (81+ million followers) have leveraged their massive platforms to drive hundreds of millions of views.</p>\n<p>Look at the below tweet I found from Cash App on May 7thof this year. By leveraging Cash App’s 1.2 million Twitter followers, $5k in marketing spend and goodwill resulted in 17.4k comments and 26.7k retweets. Those retweets create a reverberation in the Twitter ecosystem and result in a geometric increase in captive eyeballs. Now I am not a TikTok'er and I started a Twitter account within the past month, but it's important to appreciate Square's masterful use of these millennial and Gen Z driven platforms. Assuming roughly one in 50 retweeting individuals downloads CashApp, Square’s CAC is < $10 dollars.</p>\n<p><img src=\"https://static.tigerbbs.com/dee784888614bff23c414cecae7e5f7e\" tg-width=\"640\" tg-height=\"171\" referrerpolicy=\"no-referrer\"></p>\n<p>Source:CashApp Twitter</p>\n<p>The takehome point from this type of marketing? Cash App is able to climb a more vertical slope of user acquisition at lower cost than challenger and incumbent banks alike.</p>\n<p>ARK Invest estimatesincumbent banks spend an average of $925 dollars on customer acquisition. On Square’s most recent earning’s call, management confirmed their CAC was less than $5 dollars. Said another way, Square’s marketing and customer acquisition is 18,500% higher than your retail bank.</p>\n<p>So how has Square flown under the radar of the massive U.S. banking industry?</p>\n<p>Square’s strategy to largely target unbanked or “under-banked” individuals allowed them to build a platform without drawing the attention of Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM). But Square is now one of the top ten largest ‘banks’ in the United States by market cap, and is expanding its total addressable market to those who are already clients of traditional banks.</p>\n<p>This strategy of finding an underserved population, providing value to those customers, then broadening offerings and selling upmarket is in Square’s DNA. They followed the same playbook on the Seller side, initially targeting small businesses doing less than $100k in GMV, but today Square's fastest growing segment is mid- to large-size businesses.</p>\n<p>Square’s peer Venmo cannot flex the same marketing efficiencies as Cash App. Cash App continues to hold the crown as the most downloaded finance application on Apple’s App Store (AAPL) as well as Google Play Store (GOOG), more popular than Venmo, PayPal Cash, and Robinhood (RBNHD). Furthermore, Square has a full 10X more followers than Venmo on Twitter. These advantages manifest as Square enjoying a healthy gap over Venmo in search as well.</p>\n<p><img src=\"https://static.tigerbbs.com/f0ee1067df9e647949f72f4d772af186\" tg-width=\"640\" tg-height=\"172\" referrerpolicy=\"no-referrer\"></p>\n<p>Source:Similarweb</p>\n<p><img src=\"https://static.tigerbbs.com/df7398ef5a030917f6de3ac8d13fe5a9\" tg-width=\"640\" tg-height=\"394\" referrerpolicy=\"no-referrer\"></p>\n<p>Source: I made this with help fromGoogle Trends</p>\n<p>Perhaps most importantly, although Venmo has more monthly active users (MAU’s), Square is better at<i>monetizing</i>these users.According to RBC Capital analyst DanielPerlin, Venmo garners roughly $12 from each MAU, whereas Cash App brings in $54. And due to industry low CAC, Cash App gets the extra benefit of being more profitable as well.</p>\n<p>While there is much more that can be said about Square and PayPal’s competition in the challenger banking space, it is this customer acquisition and long term value that underlies why I prefer holding shares of Square over PayPal.</p>\n<p>Square is just doing the important things better than Venmo. Part of this is Dorsey's social media advantages, but I believe much if it has to do with the fact that Venmo was acquired by PayPal, whereas Square remains independent. The innovative connective tissue which once held Venmo together and fostered bold ideas and big bets was absorbed into the massive PayPal machine, and lost.</p>\n<p>As a SoFi shareholder and bull, I was disappointed to learn in my research that SoFi has been unable thus far to creatively turn its Twitter presence into a customer acquisition engine. Despite 120k+ followers, the SoFi Twitter page has relatively low engagement and no promotional activities reminiscent of #CashAppFriday. SoFi CEO Anthony Noto coincidentally was formerly COO of Twitter when #CashAppFriday first launched, and I believe he will be able to leverage this experience into a more engaging social media presence. Fortunately for SoFi, their CAC's are low (~$40) with much higher LTV's than Cash App as of now (roughly double, close to $2,000 with cross selling into lending).</p>\n<p><b>Square Financial Services: A Bank For All Mankind</b></p>\n<p>On March 1, 2021, Square announced its banking service had begun operations after completing the charter approval process with the FDIC. This is a massive catalyst for Square’s business, and positions them squarely against the glacially slow incumbent banks.</p>\n<p>I recently wrote adeep dive on SoFi(SOFI), which is also pursuing a bank charter, and discussed the massive benefits these fintech companies inherit by building banking infrastructure. With this banking platform, Square will be able to make loans using deposits on its platform, originate loans to small businesses, and improve profitability.</p>\n<p>About a month ago, an iOS developer namedSteve Moser discovered codeon a Square software update revealing new products “Square Checking” and “Square Savings.” Based on the code, Square is planning to offer 0.5% interest rates for its savings accounts through 2021, a full 8+ times higher than thenational savings account average.</p>\n<p>Square's banking play is a continuation of the playbook that led them to purchase Credit Karma’s tax preparation business in 2020. At the time of the acquisition, roughly 2 million Americans used Karma to file returns, with an average refund of $2k. Those tax returns were then deposited in Cash App accounts, where fintech magic happens. Higher account deposits can be loaned out, drive increased transaction volume, and ultimately elevate the LTV of the user.</p>\n<p>SoFi is doing something similar with its $3k account minimums for SoFi IPO Invest, and Square’s banking venture has the opportunity to both elevate account balances and steal additional customers from incumbent banks.</p>\n<p>And the incumbent banks are terrified. See what Jamie Dimon, CEO of JP Morgan and perhaps the most famous banker in the world has said about Square over the years.</p>\n<blockquote>\n What does the small business want? They wanted to process cash and checks and debit on the same machine. We didn’t give them that opportunity. Square did.\n</blockquote>\n<p>Jamie Dimon, CEO, JP Morgan, Investor Day, 2019</p>\n<p>And more recently when asked if JPM should be scared of challenger banks like Square:</p>\n<blockquote>\n Absolutely we should be scared s---less about that. We’ve just got to get quicker, better, faster.\n</blockquote>\n<p>Jamie Dimon, CEO, JP Morgan, Investor Day, January, 2021</p>\n<p>Most importantly, adding banking services multiplies the LTV of Square's customers, and is a major step towards Cash App becoming a financial super app. The single biggest money maker for individual banking customers is checking and savings accounts. According to an ARK Invest white paper, LTV per retail banking customer is roughly $3,600, of which a full 25%, or $900 is checking and savings accounts.</p>\n<p><img src=\"https://static.tigerbbs.com/2bdfa91840a4611caf6808ad0c4bb076\" tg-width=\"640\" tg-height=\"367\" referrerpolicy=\"no-referrer\"></p>\n<p>Source: ARK Invest, with annotations from me:Cash App vs Venmo</p>\n<p>You can breathlessly hype Square's Bitcoin opportunities and wax poetic about Cash App's booming Bitcoin revenue, but the meat and potatoes is here, right in front of us: Square banking. The weapon Square will use to dethrone the incumbent banks is slowly being drawn from its sheath.</p>\n<p><b>Jack Dorsey's Bitcoin Obsession</b></p>\n<p>For those of you who don't follow Dorsey on Twitter or read updates about the Bitcoin (BTC-USD) 2021 Convention, believe me when I say Jack is<i>convicted</i>about the role Bitcoin will play in the Internet’s future.</p>\n<blockquote>\n If I were not at Square or Twitter, I would be working on bitcoin. If bitcoin needed more help than Square or Twitter, I would leave them for bitcoin.\n</blockquote>\n<p>Jack Dorsey, CEO Square, CEO Twitter,Bitcoin 2021 Conference</p>\n<p>At the conference Dorsey announced Square is considering releasing a hardware Bitcoin wallet. For those unfamiliar, when you purchase cryptocurrency on an exchange, the vast majority of the time it is not actually<i>yours</i>, but is in fact an IOU. If you’ve heard the expression, “Not your keys, not your coins,” this is referring directly to this issue. If you don’t have a hardware wallet with a password only you have access to, then the coins don’t truly belong to you.</p>\n<p>Regarding Square's involvement inBitcoin hardware wallets, color me unimpressed. I was surprised to see Square’s stock pop on that news. I can’t really see a situation where a company doing $20+ Billion a year in sales like Square gets meaningful top or bottom line contribution from a glorified flash drive. It’s just not going to move the needle.</p>\n<p>To be honest, cryptocurrency is the biggest potential blind spot I see right now in Dorsey’s execution. Don’t get me wrong, as a Square shareholder I will<i>gladly accept a</i>1,047% increase year over year in Bitcoin revenue to $3.51 B as of Q1 2021. But Dorsey refusing to allow any other coins on the Cash App platform is, in my opinion, the wrong choice for Square and cryptocurrency in general. I have already heard several friends comment they see no role for Cash App because its “crypto features” only allow for Bitcoin trading.</p>\n<p>“That’s why we don’t deal with any other ‘currencies’ or ‘coins’ because we’re so focused on making bitcoin the native currency for the internet,”</p>\n<p>-Jack Dorsey, CEO Square</p>\n<p>Effectively, Dorsey is limiting features for Square’s Cash App users to focus all attention on Bitcoin. But that’s not really how cryptocurrency works – over the past several years the market share of Bitcoin has declined slightly as new platforms have generated interest and ease of investing in alternative coins. Diversity of coin options coincided with Bitcoin reaching its highest market capitalization of all time. I believe there is space for more than one coin in the future, and am personally invested in Ethereum (ETH-USD) due to the utility it offers as the nexus of Internet 3.0.</p>\n<p>I would love to see Dorsey developing revenue-driving crypto services such as decentralized finance for Square. I said this for SoFi, and I will say it again for Square: a staking system, by which users are granted upsize interest for holding Bitcoin in their Cash App, for example, would dramatically elevate Cash App’s value proposition. This is something for all challenger banks to explore and invest in, and it is a game changer.</p>\n<p>All that said, Square has a history of surprising analysts and investors with clever solutions that delight customers. Bitcoin and the cryptocurrency landscape<i>needs</i>innovation and development, and Square is well capitalized in cash and intellect to address this issue.</p>\n<p><b>Square's Near Term Risks</b></p>\n<p>Despite how positive I feel about Square's long-term positioning in the fintech space, I would be remiss if I did not alert you to several considerable near term risks. Square is hurtling towards challenging 2020 comps, with Q2 2020 being the first quarter of government disbursement checks. While I expect Square to post excellent Seller and Cash App numbers, growth will inherently moderate. Furthermore, Cash App benefited from Robinhood's well-publicized meltdown in Q1, as retail investors searched for more transparent and reliable trading platforms. This resulted in a pull-forward of user growth, and I do not believe this is sustainable or reflective of Cash App's long term user growth rates.</p>\n<p>Furthermore, Square's Q1 2021 shareholder letter was chock full of new operating expense forecasts for Q2. Square promised stock based compensation would rise materially in Q2 as new hirings occurred (in Q1 was $118 million), an increase in product development and G&A by $120 million, as well as an increase in transaction and loan losses by $40 million.</p>\n<p>A potential bright spot is Square's investment in DoorDash (DASH), which was a catalyst for Square's blowout Q4 2020 earnings. Based on a price of $168.5/share at the time of this writing, DoorDash's stock has appreciated 28.5% since Q1 end. That equates to a $65 million appreciation in Square's DoorDash equity ownership.</p>\n<p>Even still, netting out equity appreciation and Square's guided opex expansion, Square is guiding for roughly $110 million in additional Q2 spend. This is significant for a company that earned only $39 million last quarter, and Q1 was already benefiting from stimulus check disbursement and peak Bitcoin price and volatility.</p>\n<p>And that brings us to Bitcoin, of which Square owns 8,027 coins.</p>\n<p>Bitcoin's price at the conclusion of Q1 (March 31, 2021) was $58,724. At the time of this writing, one Bitcoin is valued at $32,270, or a 45% drop from the prior quarter.</p>\n<p><b>This is a loss of $259 million on Bitcoin alone in Q2, 2021.</b></p>\n<p>Gulp. All in, these costs will result in an estimated $370 million drag on Square's Q2 earnings. Despite these facts, consensus estimates for Square indicate the investment community believes Square will be<i>profitable</i>this quarter, with 86% earnings revisions up over the past three months. I would be shocked if Square turned a profit this next quarter.</p>\n<p>Accordingly, if you are considering a position in Square, this might be a good indication to wait on the sidelines and see how the next earnings call plays out. As a long term Square shareholder I will continue to hold, as none of these issues impacts my long term bullish stance on Square. I believe Bitcoin will recover over the balance of 2021, and Square's investments in product development and talent acquisition are necessary for the battle ahead with legacy banks.</p>\n<p><b>Concluding Thoughts</b></p>\n<p>The holy grail of the fintech space is low customer acquisition cost. Dorsey’s mastery of viral social media advertising generating low CAC's has been a primary catalyst of Square’s titanic growth rates. Square is just beginning to combine and integrate Cash App and Seller, which will manifest as increased user LTV and strengthening network effects.</p>\n<p>Between Square cross-selling Cash App and Seller, solidifying a banking presence with Square banking and the development and implementation of much-needed crypto services, Square will be the apex presence in the fintech space, with no natural predators. I believe this not only possible, but likely. As the future fintech king, Square has a vast ocean of opportunity ahead, because in the multi-trillion financial services space, winner takes most.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Square: Winner Takes Most</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSquare: Winner Takes Most\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-22 17:04 GMT+8 <a href=https://seekingalpha.com/article/4435869-square-winner-takes-most><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nArguably the most important fintech metric is customer acquisition cost (CAC). Square’s mastery of viral marketing results in the lowest CAC in the digital wallet space. This is a moat.\n...</p>\n\n<a href=\"https://seekingalpha.com/article/4435869-square-winner-takes-most\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SQ":"Block"},"source_url":"https://seekingalpha.com/article/4435869-square-winner-takes-most","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1188931868","content_text":"Summary\n\nArguably the most important fintech metric is customer acquisition cost (CAC). Square’s mastery of viral marketing results in the lowest CAC in the digital wallet space. This is a moat.\nSquare is building massive ecosystems in Cash App and Seller that are just beginning to overlap, which results in massive cross-selling opportunities and network effects.\nSquare banking is a major catalyst that has not received sufficient attention from analysts or investors.\nSquare has spent an entire year building as-of-yet unannounced Square Checking and Square Banking products. This is a shot across the bow at incumbent banks, and indicates Square is ready for a higher level of fintech warfare.\nSquare’s future relationship with crypto remains undercooked, and Dorsey’s overfocus on Bitcoin to the exclusion of alternative coins is an uncommon mistake.\n\nSquare's Investment Thesis\nWhen I begin researching a company for an article, I always start with the CEO. For as much as I know about balance sheets and technical analysis, it is the CEO that I am most critical and analytical about.\nThis is reflected in the types of companies I invest in and write about. Opendoor (OPEN), SoFi (SOFI), Zillow (Z) and Palantir (PLTR) are each led by visionary CEO’s, with colorful histories who make massive contributions to their industries. In my opinion, the story behind these disruptive companies and the CEOs who lead them can inform investment decisions as surely as an earnings report.\nWriting this article began no differently. Jack Dorsey, the $15 Billion dollar man who leads both Square (SQ) and Twitter (TWTR), is one of Wall Street’s biggest eccentricities. He has a penchant for meditating, facial hair, intermittent fasting, 80+ minute morning walks and wields an invisible armor that has allowed him to endure a decade of investors ranting he over-focuses on Square to the detriment of Twitter (sorry Twitter longs).\nToday, we will dive into Square – its competitive advantages over neo-banking peers and incumbents alike, Square's banking opportunity, as well as an update on Square’s cryptocurrency initiatives. Square is the best positioned company in the digital wallet space, and Jack's advertising expertise gained by founding and running Twitter has allowed Square to deploy viral marketing campaigns to fuel absurd growth in Cash App. Cash App's success is rivaled only by Square's Seller ecosystem, and these two businesses are just beginning to combine, interact and compound.\nWe're going to talk about all of this here. But first, I want to share a story about how a young Square, in its first years as a company, suffered a direct Amazon (AMZN) salvo and somehow emerged stronger.\nHow Square Survived An Amazon Siege\nBookstores, brick and mortal retail, supermarkets, meal-kits, enterprise cloud, the list of industries Amazon has bled out and internalized stretches on.\nAmazon has earned the moniker, “The Death Star.”Bought and paid for it. Over the past two decades no other company has so pervasively and efficiently disrupted legacy industries.\nAs a brief anecdote, in his early days at Amazon, CEO and founder Jeff Bezos was always searching for ways to eliminate company overhead. In his mind, the less Amazon spent on operations, the more savings could be passed on to Amazon customers.\nIn this vein, instead of purchasing a fancy desk for his office, Bezos built his own out of a recycled door and some two by fours. This practice caught on, and Amazon's employees participated broadly by building their own desks out of wooden doors.\nThe wooden door initiative served two purposes: 1) it was a cultural commitment to humility, from the top down, and 2) it emphasized the importance of spending money only on initiatives that improve the customer experience.\nThere's a picture of Bezos working away on his door deskhere. I’m tempted to frame this photograph, and I probably would if my fiancé would let me. Just confirmed, she says no. But I love this combined concept of customer obsession and frugality.\nFrom a capital allocation, leadership, and customer-centric perspective, it’s easy to look back now and recognize how Amazon became the goliath it is today. Bezos may not look it, but he is a ruthless, patient CEO whose basilisk gaze you pray doesn’t fall on your industry.\nSo when Amazon turned its cannons on a private, relatively small payment processing company named Square in 2014, you didn’t have to be a rocket scientist to know who would be left standing after the dust settled.\nBut if you assumed it would be Amazon, you would have been wrong.\n“Amazon Register” was built to kill Square. It undercut Square’s pricing by 30% and offered live customer service (which Square did not have). Even by Square co-founderJim McKelvey’s own admission, Amazon’s product worked better than Square’s ‘dongle’ did (I hate that word as much as you do and I promise to not use it again).\nBut Square survived. Thrived in fact. Square continued to execute along the same playbook, launched new features like Square Capital to the innovation stack, and grew roughly 10% week over week that year. Amazon, for all its strength, could not compete with Square in offerings, and small businesses were understandably skeptical about partnering with Amazon.\nAfter the year-long siege, on October 30, 2015, Amazon gracefully bowed out, announcing they were shuttering Amazon Register. When the hardware was officially discontinued in early 2016, Amazon mailed a white Square card reader to each of its business customers.\nAnd the rest is history.\nSince Square’s IPO in 2015, the company has continued to fend off fearsome competitors such as Intuit (INTU), PayPal (PYPL), and Shopify (SHOP), not to mention the largest banking systems in the world. Square has ridden a wave of timely and engaging financial innovations to a market cap of $107 Billion at the time of this writing. Cash App’s growth has been an absolute rocket ship, and Dorsey is delivering on the long term vision of connecting Seller and Cash App to one, unified ecosystem.\nSquare’s Moat: Customer Acquisition Cost\nIn the banking space, the company that optimizes lifetime value [LTV] vs customer acquisition cost [CAC] is the company that wins.\nRead that again, write it down, bold it and underline it.\nThis is not supernatural. Behind the B-school terminology is a basic principle of unit economics: make more from a customer than it costs to acquire them, and do it better than competitors.\nOf all the participants in the banking ecosystem, I believe Square has the lowest customer acquisition costs. This is a major part of the Dorsey value proposition, and misunderstood.\nAs founder and CEO of both Square and Twitter, Dorsey has been able to leverage his incredibly nuanced understanding of viral communication to inform viral marketing. Starting in 2017, Twitter mediated campaigns like #CashAppFriday, in which Square offers thousands of dollars to Twitter users who post their Cash App handle, has drawn massive numbers of comments, retweets and Cash App downloads. Partnerships with engaging content developers like the Joe Rogan Experience, Lex Fridmen, Burger King, Travis Scott and Lil B have continued to drive brand awareness. This brand awareness is critical, especially in a crowded digital banking space.According to this study, 82% of app or internet searchers choose a familiar brand for the first click.\nAs an example of viral and opportunistic marketing, in 2018 a prominent content creator on TikTok, “Shiggy” released a SoundCloud song about Cash App. After striking a sponsorship deal with Shiggy in 2019, the Cash App marketing team edited a shorter version of the single, and reached out to TikTok influencers with the below message:\n\n Create a TikTok with your best interpretation of the catchy song in everyday situations. And use hashtag #CashAppThatMoney.\n\nSource:Business Insider\nTo date, the Shiggy Cash App song has beenused in 9,138 videos. Prominent TikTok influencers such as Addison Rae (81+ million followers) have leveraged their massive platforms to drive hundreds of millions of views.\nLook at the below tweet I found from Cash App on May 7thof this year. By leveraging Cash App’s 1.2 million Twitter followers, $5k in marketing spend and goodwill resulted in 17.4k comments and 26.7k retweets. Those retweets create a reverberation in the Twitter ecosystem and result in a geometric increase in captive eyeballs. Now I am not a TikTok'er and I started a Twitter account within the past month, but it's important to appreciate Square's masterful use of these millennial and Gen Z driven platforms. Assuming roughly one in 50 retweeting individuals downloads CashApp, Square’s CAC is < $10 dollars.\n\nSource:CashApp Twitter\nThe takehome point from this type of marketing? Cash App is able to climb a more vertical slope of user acquisition at lower cost than challenger and incumbent banks alike.\nARK Invest estimatesincumbent banks spend an average of $925 dollars on customer acquisition. On Square’s most recent earning’s call, management confirmed their CAC was less than $5 dollars. Said another way, Square’s marketing and customer acquisition is 18,500% higher than your retail bank.\nSo how has Square flown under the radar of the massive U.S. banking industry?\nSquare’s strategy to largely target unbanked or “under-banked” individuals allowed them to build a platform without drawing the attention of Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM). But Square is now one of the top ten largest ‘banks’ in the United States by market cap, and is expanding its total addressable market to those who are already clients of traditional banks.\nThis strategy of finding an underserved population, providing value to those customers, then broadening offerings and selling upmarket is in Square’s DNA. They followed the same playbook on the Seller side, initially targeting small businesses doing less than $100k in GMV, but today Square's fastest growing segment is mid- to large-size businesses.\nSquare’s peer Venmo cannot flex the same marketing efficiencies as Cash App. Cash App continues to hold the crown as the most downloaded finance application on Apple’s App Store (AAPL) as well as Google Play Store (GOOG), more popular than Venmo, PayPal Cash, and Robinhood (RBNHD). Furthermore, Square has a full 10X more followers than Venmo on Twitter. These advantages manifest as Square enjoying a healthy gap over Venmo in search as well.\n\nSource:Similarweb\n\nSource: I made this with help fromGoogle Trends\nPerhaps most importantly, although Venmo has more monthly active users (MAU’s), Square is better atmonetizingthese users.According to RBC Capital analyst DanielPerlin, Venmo garners roughly $12 from each MAU, whereas Cash App brings in $54. And due to industry low CAC, Cash App gets the extra benefit of being more profitable as well.\nWhile there is much more that can be said about Square and PayPal’s competition in the challenger banking space, it is this customer acquisition and long term value that underlies why I prefer holding shares of Square over PayPal.\nSquare is just doing the important things better than Venmo. Part of this is Dorsey's social media advantages, but I believe much if it has to do with the fact that Venmo was acquired by PayPal, whereas Square remains independent. The innovative connective tissue which once held Venmo together and fostered bold ideas and big bets was absorbed into the massive PayPal machine, and lost.\nAs a SoFi shareholder and bull, I was disappointed to learn in my research that SoFi has been unable thus far to creatively turn its Twitter presence into a customer acquisition engine. Despite 120k+ followers, the SoFi Twitter page has relatively low engagement and no promotional activities reminiscent of #CashAppFriday. SoFi CEO Anthony Noto coincidentally was formerly COO of Twitter when #CashAppFriday first launched, and I believe he will be able to leverage this experience into a more engaging social media presence. Fortunately for SoFi, their CAC's are low (~$40) with much higher LTV's than Cash App as of now (roughly double, close to $2,000 with cross selling into lending).\nSquare Financial Services: A Bank For All Mankind\nOn March 1, 2021, Square announced its banking service had begun operations after completing the charter approval process with the FDIC. This is a massive catalyst for Square’s business, and positions them squarely against the glacially slow incumbent banks.\nI recently wrote adeep dive on SoFi(SOFI), which is also pursuing a bank charter, and discussed the massive benefits these fintech companies inherit by building banking infrastructure. With this banking platform, Square will be able to make loans using deposits on its platform, originate loans to small businesses, and improve profitability.\nAbout a month ago, an iOS developer namedSteve Moser discovered codeon a Square software update revealing new products “Square Checking” and “Square Savings.” Based on the code, Square is planning to offer 0.5% interest rates for its savings accounts through 2021, a full 8+ times higher than thenational savings account average.\nSquare's banking play is a continuation of the playbook that led them to purchase Credit Karma’s tax preparation business in 2020. At the time of the acquisition, roughly 2 million Americans used Karma to file returns, with an average refund of $2k. Those tax returns were then deposited in Cash App accounts, where fintech magic happens. Higher account deposits can be loaned out, drive increased transaction volume, and ultimately elevate the LTV of the user.\nSoFi is doing something similar with its $3k account minimums for SoFi IPO Invest, and Square’s banking venture has the opportunity to both elevate account balances and steal additional customers from incumbent banks.\nAnd the incumbent banks are terrified. See what Jamie Dimon, CEO of JP Morgan and perhaps the most famous banker in the world has said about Square over the years.\n\n What does the small business want? They wanted to process cash and checks and debit on the same machine. We didn’t give them that opportunity. Square did.\n\nJamie Dimon, CEO, JP Morgan, Investor Day, 2019\nAnd more recently when asked if JPM should be scared of challenger banks like Square:\n\n Absolutely we should be scared s---less about that. We’ve just got to get quicker, better, faster.\n\nJamie Dimon, CEO, JP Morgan, Investor Day, January, 2021\nMost importantly, adding banking services multiplies the LTV of Square's customers, and is a major step towards Cash App becoming a financial super app. The single biggest money maker for individual banking customers is checking and savings accounts. According to an ARK Invest white paper, LTV per retail banking customer is roughly $3,600, of which a full 25%, or $900 is checking and savings accounts.\n\nSource: ARK Invest, with annotations from me:Cash App vs Venmo\nYou can breathlessly hype Square's Bitcoin opportunities and wax poetic about Cash App's booming Bitcoin revenue, but the meat and potatoes is here, right in front of us: Square banking. The weapon Square will use to dethrone the incumbent banks is slowly being drawn from its sheath.\nJack Dorsey's Bitcoin Obsession\nFor those of you who don't follow Dorsey on Twitter or read updates about the Bitcoin (BTC-USD) 2021 Convention, believe me when I say Jack isconvictedabout the role Bitcoin will play in the Internet’s future.\n\n If I were not at Square or Twitter, I would be working on bitcoin. If bitcoin needed more help than Square or Twitter, I would leave them for bitcoin.\n\nJack Dorsey, CEO Square, CEO Twitter,Bitcoin 2021 Conference\nAt the conference Dorsey announced Square is considering releasing a hardware Bitcoin wallet. For those unfamiliar, when you purchase cryptocurrency on an exchange, the vast majority of the time it is not actuallyyours, but is in fact an IOU. If you’ve heard the expression, “Not your keys, not your coins,” this is referring directly to this issue. If you don’t have a hardware wallet with a password only you have access to, then the coins don’t truly belong to you.\nRegarding Square's involvement inBitcoin hardware wallets, color me unimpressed. I was surprised to see Square’s stock pop on that news. I can’t really see a situation where a company doing $20+ Billion a year in sales like Square gets meaningful top or bottom line contribution from a glorified flash drive. It’s just not going to move the needle.\nTo be honest, cryptocurrency is the biggest potential blind spot I see right now in Dorsey’s execution. Don’t get me wrong, as a Square shareholder I willgladly accept a1,047% increase year over year in Bitcoin revenue to $3.51 B as of Q1 2021. But Dorsey refusing to allow any other coins on the Cash App platform is, in my opinion, the wrong choice for Square and cryptocurrency in general. I have already heard several friends comment they see no role for Cash App because its “crypto features” only allow for Bitcoin trading.\n“That’s why we don’t deal with any other ‘currencies’ or ‘coins’ because we’re so focused on making bitcoin the native currency for the internet,”\n-Jack Dorsey, CEO Square\nEffectively, Dorsey is limiting features for Square’s Cash App users to focus all attention on Bitcoin. But that’s not really how cryptocurrency works – over the past several years the market share of Bitcoin has declined slightly as new platforms have generated interest and ease of investing in alternative coins. Diversity of coin options coincided with Bitcoin reaching its highest market capitalization of all time. I believe there is space for more than one coin in the future, and am personally invested in Ethereum (ETH-USD) due to the utility it offers as the nexus of Internet 3.0.\nI would love to see Dorsey developing revenue-driving crypto services such as decentralized finance for Square. I said this for SoFi, and I will say it again for Square: a staking system, by which users are granted upsize interest for holding Bitcoin in their Cash App, for example, would dramatically elevate Cash App’s value proposition. This is something for all challenger banks to explore and invest in, and it is a game changer.\nAll that said, Square has a history of surprising analysts and investors with clever solutions that delight customers. Bitcoin and the cryptocurrency landscapeneedsinnovation and development, and Square is well capitalized in cash and intellect to address this issue.\nSquare's Near Term Risks\nDespite how positive I feel about Square's long-term positioning in the fintech space, I would be remiss if I did not alert you to several considerable near term risks. Square is hurtling towards challenging 2020 comps, with Q2 2020 being the first quarter of government disbursement checks. While I expect Square to post excellent Seller and Cash App numbers, growth will inherently moderate. Furthermore, Cash App benefited from Robinhood's well-publicized meltdown in Q1, as retail investors searched for more transparent and reliable trading platforms. This resulted in a pull-forward of user growth, and I do not believe this is sustainable or reflective of Cash App's long term user growth rates.\nFurthermore, Square's Q1 2021 shareholder letter was chock full of new operating expense forecasts for Q2. Square promised stock based compensation would rise materially in Q2 as new hirings occurred (in Q1 was $118 million), an increase in product development and G&A by $120 million, as well as an increase in transaction and loan losses by $40 million.\nA potential bright spot is Square's investment in DoorDash (DASH), which was a catalyst for Square's blowout Q4 2020 earnings. Based on a price of $168.5/share at the time of this writing, DoorDash's stock has appreciated 28.5% since Q1 end. That equates to a $65 million appreciation in Square's DoorDash equity ownership.\nEven still, netting out equity appreciation and Square's guided opex expansion, Square is guiding for roughly $110 million in additional Q2 spend. This is significant for a company that earned only $39 million last quarter, and Q1 was already benefiting from stimulus check disbursement and peak Bitcoin price and volatility.\nAnd that brings us to Bitcoin, of which Square owns 8,027 coins.\nBitcoin's price at the conclusion of Q1 (March 31, 2021) was $58,724. At the time of this writing, one Bitcoin is valued at $32,270, or a 45% drop from the prior quarter.\nThis is a loss of $259 million on Bitcoin alone in Q2, 2021.\nGulp. All in, these costs will result in an estimated $370 million drag on Square's Q2 earnings. Despite these facts, consensus estimates for Square indicate the investment community believes Square will beprofitablethis quarter, with 86% earnings revisions up over the past three months. I would be shocked if Square turned a profit this next quarter.\nAccordingly, if you are considering a position in Square, this might be a good indication to wait on the sidelines and see how the next earnings call plays out. As a long term Square shareholder I will continue to hold, as none of these issues impacts my long term bullish stance on Square. I believe Bitcoin will recover over the balance of 2021, and Square's investments in product development and talent acquisition are necessary for the battle ahead with legacy banks.\nConcluding Thoughts\nThe holy grail of the fintech space is low customer acquisition cost. Dorsey’s mastery of viral social media advertising generating low CAC's has been a primary catalyst of Square’s titanic growth rates. Square is just beginning to combine and integrate Cash App and Seller, which will manifest as increased user LTV and strengthening network effects.\nBetween Square cross-selling Cash App and Seller, solidifying a banking presence with Square banking and the development and implementation of much-needed crypto services, Square will be the apex presence in the fintech space, with no natural predators. I believe this not only possible, but likely. As the future fintech king, Square has a vast ocean of opportunity ahead, because in the multi-trillion financial services space, winner takes most.","news_type":1},"isVote":1,"tweetType":1,"viewCount":532,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":167933557,"gmtCreate":1624241843979,"gmtModify":1703831329842,"author":{"id":"3585618131873923","authorId":"3585618131873923","name":"Geant","avatar":"https://static.tigerbbs.com/4c927c4614090da5a1ecd981332db3c3","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"authorIdStr":"3585618131873923","idStr":"3585618131873923"},"themes":[],"htmlText":"Like and comment thanks","listText":"Like and comment thanks","text":"Like and comment thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/167933557","repostId":"1110026756","repostType":4,"repost":{"id":"1110026756","kind":"news","pubTimestamp":1624240786,"share":"https://ttm.financial/m/news/1110026756?lang=&edition=fundamental","pubTime":"2021-06-21 09:59","market":"us","language":"en","title":"FAANG Stocks In First-half: Last Year's Laggards Google, Facebook Come On Top As Apple, Amazon And Netflix Fall Off","url":"https://stock-news.laohu8.com/highlight/detail?id=1110026756","media":"benzinga","summary":"The broader market witnessed some scare in the early part of the first half of 2021 but came back up","content":"<p>The broader market witnessed some scare in the early part of the first half of 2021 but came back up strongly to stay close to record territory.</p>\n<p>The volatility seen in the broader market was largely a function of the swings in technology stocks, especially the big ones.</p>\n<p>Here's a look at how the high-profile tech stocks going by the moniker \"FAANG\" fared during the volatile period:</p>\n<p><b>Broader Market's \"Up-down-up\" Move:</b>The S&P 500, which is a considered a broader gauge of overall market performance, closed 2020 just shy of its all-high. Subsequently, the index experienced some volatility and was largely rangebound.</p>\n<p>In late January, the market suffered a sell-off, which was blamed on the speculative behavior of retail investors.</p>\n<p>Although the market bounced back up fairly soon, another sell-off, orchestrated by tech meltdown, ensued in early March.</p>\n<p>After a broadly higher move until early May, the market retreated yet again but this time around the pullback was short-lived.</p>\n<p>The resilient market shot back up and is hovering near record territory despite macroeconomic worries overrising inflation.</p>\n<p><b>Apple In The Red:Apple Inc.</b>(NASDAQ:AAPL), which is the most valued tech company, has had an unenterprising first half.</p>\n<p>Despite reporting stellar first-quarter results, as the iPhone 12 momentum spilled over past the holiday quarter, the shares are still down for the year-to-period.</p>\n<p>In comparison, Apple shares were solidly higher in the same period last year and ended 2020 as the top-performing FAANG stock.</p>\n<p>Apple's best comes out in the second half, be it its products or financial performance.</p>\n<p>Given that Apple is Apple, one cannot write it off yet. The likely launch of the next iteration of its iPhone in September could kickstart a rally in the second half.</p>\n<p><img src=\"https://static.tigerbbs.com/558fe332f66ce28b901debc9e53b8f20\" tg-width=\"748\" tg-height=\"307\" referrerpolicy=\"no-referrer\"></p>\n<p><b>Netflix Puts Up a Flop Show:</b>Streaming giant<b>Netflix, Inc.</b>(NASDAQ:NFLX) is facing turbulence amid increasing competition, which has put pressure on its net subscriber addition.</p>\n<p>Additionally, tougher comparisons versus the lock-down induced strength in 2020 is serving as a dampener.</p>\n<p>The stock is still down for the year-to-date period vis-à-vis very strong performances for the first half of 2020 and the full year 2020.</p>\n<p>With \"Money Heist\" and \"The Witcher\" — two of Netflix' most successful shows — likely to return in the second half, subscriber numbers should look up in the fourth quarter, according to KeyBanc analyst Justin Patterson.</p>\n<p><b>Laggards Turn Leaders:</b>Shares of<b>Facebook, Inc.</b>(NASDAQ:FB) and<b>Alphabet, Inc.</b>(NASDAQ:GOOGL) (NASDAQ:GOOG), both of which had a single-digit gain percentage in the first half of 2020, are the best performers of the year-to-date period in 2021.</p>\n<p>Facebook has emerged stronger from the data scandal and the COVID-19 pandemic came at the right time, giving a lift to its user engagement.</p>\n<p>Daily active users rose 11% year-over-year to 1.84 billion at the end of 2020 and the monthly active user count was at 2.80 billion, up 12%.</p>\n<p>These increased further to 1.878 billion and 2.853 billion, respectively at the end of the first quarter of 2021.</p>\n<p>Google is thus far the best performing FAANG stocks, thanks to solid support from rising ad revenues from its core search business and its YouTube video platform.</p>\n<p>In addition to ad revenues, YouTube now collects subscription fees. The company also has a thriving cloud computing business.</p>\n<p>The sum-of-parts contribution of each of Google's businesses has given an enviable valuation for shares.</p>\n<p><b>Amazon Cools Off:Amazon.com, Inc.</b>(NASDAQ:AMZN), which was the second-best performing FAANG in 2020, is barely in the green in the first half of 2021.</p>\n<p>This is despite the online retail giant turning in a stellar performance in the first quarter. Amazon's core retail sales as well as its high-margin AWS cloud business and advertising all performed well in the quarter. On top of this, the company gave upbeat guidance for the second quarter.</p>\n<p>The average analyst price target for Amazon is $4,238, suggesting roughly 24% upside from current levels. Amazon shares present a buying opportunity, barring any fundamental mishap, given its muted performance thus far this year.</p>","source":"lsy1606299360108","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>FAANG Stocks In First-half: Last Year's Laggards Google, Facebook Come On Top As Apple, Amazon And Netflix Fall Off</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nFAANG Stocks In First-half: Last Year's Laggards Google, Facebook Come On Top As Apple, Amazon And Netflix Fall Off\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-21 09:59 GMT+8 <a href=https://www.benzinga.com/tech/21/06/21613099/faang-stocks-in-first-half-last-years-laggards-google-facebook-come-on-top-as-apple-amazon-and-netfl><strong>benzinga</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>The broader market witnessed some scare in the early part of the first half of 2021 but came back up strongly to stay close to record territory.\nThe volatility seen in the broader market was largely a...</p>\n\n<a href=\"https://www.benzinga.com/tech/21/06/21613099/faang-stocks-in-first-half-last-years-laggards-google-facebook-come-on-top-as-apple-amazon-and-netfl\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊","GOOG":"谷歌","AAPL":"苹果","NFLX":"奈飞"},"source_url":"https://www.benzinga.com/tech/21/06/21613099/faang-stocks-in-first-half-last-years-laggards-google-facebook-come-on-top-as-apple-amazon-and-netfl","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1110026756","content_text":"The broader market witnessed some scare in the early part of the first half of 2021 but came back up strongly to stay close to record territory.\nThe volatility seen in the broader market was largely a function of the swings in technology stocks, especially the big ones.\nHere's a look at how the high-profile tech stocks going by the moniker \"FAANG\" fared during the volatile period:\nBroader Market's \"Up-down-up\" Move:The S&P 500, which is a considered a broader gauge of overall market performance, closed 2020 just shy of its all-high. Subsequently, the index experienced some volatility and was largely rangebound.\nIn late January, the market suffered a sell-off, which was blamed on the speculative behavior of retail investors.\nAlthough the market bounced back up fairly soon, another sell-off, orchestrated by tech meltdown, ensued in early March.\nAfter a broadly higher move until early May, the market retreated yet again but this time around the pullback was short-lived.\nThe resilient market shot back up and is hovering near record territory despite macroeconomic worries overrising inflation.\nApple In The Red:Apple Inc.(NASDAQ:AAPL), which is the most valued tech company, has had an unenterprising first half.\nDespite reporting stellar first-quarter results, as the iPhone 12 momentum spilled over past the holiday quarter, the shares are still down for the year-to-period.\nIn comparison, Apple shares were solidly higher in the same period last year and ended 2020 as the top-performing FAANG stock.\nApple's best comes out in the second half, be it its products or financial performance.\nGiven that Apple is Apple, one cannot write it off yet. The likely launch of the next iteration of its iPhone in September could kickstart a rally in the second half.\n\nNetflix Puts Up a Flop Show:Streaming giantNetflix, Inc.(NASDAQ:NFLX) is facing turbulence amid increasing competition, which has put pressure on its net subscriber addition.\nAdditionally, tougher comparisons versus the lock-down induced strength in 2020 is serving as a dampener.\nThe stock is still down for the year-to-date period vis-à-vis very strong performances for the first half of 2020 and the full year 2020.\nWith \"Money Heist\" and \"The Witcher\" — two of Netflix' most successful shows — likely to return in the second half, subscriber numbers should look up in the fourth quarter, according to KeyBanc analyst Justin Patterson.\nLaggards Turn Leaders:Shares ofFacebook, Inc.(NASDAQ:FB) andAlphabet, Inc.(NASDAQ:GOOGL) (NASDAQ:GOOG), both of which had a single-digit gain percentage in the first half of 2020, are the best performers of the year-to-date period in 2021.\nFacebook has emerged stronger from the data scandal and the COVID-19 pandemic came at the right time, giving a lift to its user engagement.\nDaily active users rose 11% year-over-year to 1.84 billion at the end of 2020 and the monthly active user count was at 2.80 billion, up 12%.\nThese increased further to 1.878 billion and 2.853 billion, respectively at the end of the first quarter of 2021.\nGoogle is thus far the best performing FAANG stocks, thanks to solid support from rising ad revenues from its core search business and its YouTube video platform.\nIn addition to ad revenues, YouTube now collects subscription fees. The company also has a thriving cloud computing business.\nThe sum-of-parts contribution of each of Google's businesses has given an enviable valuation for shares.\nAmazon Cools Off:Amazon.com, Inc.(NASDAQ:AMZN), which was the second-best performing FAANG in 2020, is barely in the green in the first half of 2021.\nThis is despite the online retail giant turning in a stellar performance in the first quarter. Amazon's core retail sales as well as its high-margin AWS cloud business and advertising all performed well in the quarter. On top of this, the company gave upbeat guidance for the second quarter.\nThe average analyst price target for Amazon is $4,238, suggesting roughly 24% upside from current levels. Amazon shares present a buying opportunity, barring any fundamental mishap, given its muted performance thus far this year.","news_type":1},"isVote":1,"tweetType":1,"viewCount":720,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":129944367,"gmtCreate":1624354704359,"gmtModify":1703834225196,"author":{"id":"3585618131873923","authorId":"3585618131873923","name":"Geant","avatar":"https://static.tigerbbs.com/4c927c4614090da5a1ecd981332db3c3","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3585618131873923","authorIdStr":"3585618131873923"},"themes":[],"htmlText":"Like and comment thanks","listText":"Like and comment thanks","text":"Like and comment thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":5,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/129944367","repostId":"1188931868","repostType":4,"repost":{"id":"1188931868","kind":"news","pubTimestamp":1624352654,"share":"https://ttm.financial/m/news/1188931868?lang=&edition=fundamental","pubTime":"2021-06-22 17:04","market":"us","language":"en","title":"Square: Winner Takes Most","url":"https://stock-news.laohu8.com/highlight/detail?id=1188931868","media":"seekingalpha","summary":"Summary\n\nArguably the most important fintech metric is customer acquisition cost (CAC). Square’s mas","content":"<p><b>Summary</b></p>\n<ul>\n <li>Arguably the most important fintech metric is customer acquisition cost (CAC). Square’s mastery of viral marketing results in the lowest CAC in the digital wallet space. This is a moat.</li>\n <li>Square is building massive ecosystems in Cash App and Seller that are just beginning to overlap, which results in massive cross-selling opportunities and network effects.</li>\n <li>Square banking is a major catalyst that has not received sufficient attention from analysts or investors.</li>\n <li>Square has spent an entire year building as-of-yet unannounced Square Checking and Square Banking products. This is a shot across the bow at incumbent banks, and indicates Square is ready for a higher level of fintech warfare.</li>\n <li>Square’s future relationship with crypto remains undercooked, and Dorsey’s overfocus on Bitcoin to the exclusion of alternative coins is an uncommon mistake.</li>\n</ul>\n<p><b>Square's Investment Thesis</b></p>\n<p>When I begin researching a company for an article, I always start with the CEO. For as much as I know about balance sheets and technical analysis, it is the CEO that I am most critical and analytical about.</p>\n<p>This is reflected in the types of companies I invest in and write about. Opendoor (OPEN), SoFi (SOFI), Zillow (Z) and Palantir (PLTR) are each led by visionary CEO’s, with colorful histories who make massive contributions to their industries. In my opinion, the story behind these disruptive companies and the CEOs who lead them can inform investment decisions as surely as an earnings report.</p>\n<p>Writing this article began no differently. Jack Dorsey, the $15 Billion dollar man who leads both Square (SQ) and Twitter (TWTR), is one of Wall Street’s biggest eccentricities. He has a penchant for meditating, facial hair, intermittent fasting, 80+ minute morning walks and wields an invisible armor that has allowed him to endure a decade of investors ranting he over-focuses on Square to the detriment of Twitter (sorry Twitter longs).</p>\n<p>Today, we will dive into Square – its competitive advantages over neo-banking peers and incumbents alike, Square's banking opportunity, as well as an update on Square’s cryptocurrency initiatives. Square is the best positioned company in the digital wallet space, and Jack's advertising expertise gained by founding and running Twitter has allowed Square to deploy viral marketing campaigns to fuel absurd growth in Cash App. Cash App's success is rivaled only by Square's Seller ecosystem, and these two businesses are just beginning to combine, interact and compound.</p>\n<p>We're going to talk about all of this here. But first, I want to share a story about how a young Square, in its first years as a company, suffered a direct Amazon (AMZN) salvo and somehow emerged stronger.</p>\n<p><b>How Square Survived An Amazon Siege</b></p>\n<p>Bookstores, brick and mortal retail, supermarkets, meal-kits, enterprise cloud, the list of industries Amazon has bled out and internalized stretches on.</p>\n<p>Amazon has earned the moniker, “The Death Star.”Bought and paid for it. Over the past two decades no other company has so pervasively and efficiently disrupted legacy industries.</p>\n<p>As a brief anecdote, in his early days at Amazon, CEO and founder Jeff Bezos was always searching for ways to eliminate company overhead. In his mind, the less Amazon spent on operations, the more savings could be passed on to Amazon customers.</p>\n<p>In this vein, instead of purchasing a fancy desk for his office, Bezos built his own out of a recycled door and some two by fours. This practice caught on, and Amazon's employees participated broadly by building their own desks out of wooden doors.</p>\n<p>The wooden door initiative served two purposes: 1) it was a cultural commitment to humility, from the top down, and 2) it emphasized the importance of spending money only on initiatives that improve the customer experience.</p>\n<p>There's a picture of Bezos working away on his door deskhere. I’m tempted to frame this photograph, and I probably would if my fiancé would let me. Just confirmed, she says no. But I love this combined concept of customer obsession and frugality.</p>\n<p>From a capital allocation, leadership, and customer-centric perspective, it’s easy to look back now and recognize how Amazon became the goliath it is today. Bezos may not look it, but he is a ruthless, patient CEO whose basilisk gaze you pray doesn’t fall on your industry.</p>\n<p>So when Amazon turned its cannons on a private, relatively small payment processing company named Square in 2014, you didn’t have to be a rocket scientist to know who would be left standing after the dust settled.</p>\n<p>But if you assumed it would be Amazon, you would have been wrong.</p>\n<p>“Amazon Register” was built to kill Square. It undercut Square’s pricing by 30% and offered live customer service (which Square did not have). Even by Square co-founderJim McKelvey’s own admission, Amazon’s product worked better than Square’s ‘dongle’ did (I hate that word as much as you do and I promise to not use it again).</p>\n<p>But Square survived. Thrived in fact. Square continued to execute along the same playbook, launched new features like Square Capital to the innovation stack, and grew roughly 10% week over week that year. Amazon, for all its strength, could not compete with Square in offerings, and small businesses were understandably skeptical about partnering with Amazon.</p>\n<p>After the year-long siege, on October 30, 2015, Amazon gracefully bowed out, announcing they were shuttering Amazon Register. When the hardware was officially discontinued in early 2016, Amazon mailed a white Square card reader to each of its business customers.</p>\n<p>And the rest is history.</p>\n<p>Since Square’s IPO in 2015, the company has continued to fend off fearsome competitors such as Intuit (INTU), PayPal (PYPL), and Shopify (SHOP), not to mention the largest banking systems in the world. Square has ridden a wave of timely and engaging financial innovations to a market cap of $107 Billion at the time of this writing. Cash App’s growth has been an absolute rocket ship, and Dorsey is delivering on the long term vision of connecting Seller and Cash App to one, unified ecosystem.</p>\n<p><b>Square’s Moat: Customer Acquisition Cost</b></p>\n<p>In the banking space, the company that optimizes lifetime value [LTV] vs customer acquisition cost [CAC] is the company that wins.</p>\n<p>Read that again, write it down, bold it and underline it.</p>\n<p>This is not supernatural. Behind the B-school terminology is a basic principle of unit economics: make more from a customer than it costs to acquire them, and do it better than competitors.</p>\n<p>Of all the participants in the banking ecosystem, I believe Square has the lowest customer acquisition costs. This is a major part of the Dorsey value proposition, and misunderstood.</p>\n<p>As founder and CEO of both Square and Twitter, Dorsey has been able to leverage his incredibly nuanced understanding of viral communication to inform viral marketing. Starting in 2017, Twitter mediated campaigns like #CashAppFriday, in which Square offers thousands of dollars to Twitter users who post their Cash App handle, has drawn massive numbers of comments, retweets and Cash App downloads. Partnerships with engaging content developers like the Joe Rogan Experience, Lex Fridmen, Burger King, Travis Scott and Lil B have continued to drive brand awareness. This brand awareness is critical, especially in a crowded digital banking space.According to this study, 82% of app or internet searchers choose a familiar brand for the first click.</p>\n<p>As an example of viral and opportunistic marketing, in 2018 a prominent content creator on TikTok, “Shiggy” released a SoundCloud song about Cash App. After striking a sponsorship deal with Shiggy in 2019, the Cash App marketing team edited a shorter version of the single, and reached out to TikTok influencers with the below message:</p>\n<blockquote>\n Create a TikTok with your best interpretation of the catchy song in everyday situations. And use hashtag #CashAppThatMoney.\n</blockquote>\n<p>Source:Business Insider</p>\n<p>To date, the Shiggy Cash App song has beenused in 9,138 videos. Prominent TikTok influencers such as Addison Rae (81+ million followers) have leveraged their massive platforms to drive hundreds of millions of views.</p>\n<p>Look at the below tweet I found from Cash App on May 7thof this year. By leveraging Cash App’s 1.2 million Twitter followers, $5k in marketing spend and goodwill resulted in 17.4k comments and 26.7k retweets. Those retweets create a reverberation in the Twitter ecosystem and result in a geometric increase in captive eyeballs. Now I am not a TikTok'er and I started a Twitter account within the past month, but it's important to appreciate Square's masterful use of these millennial and Gen Z driven platforms. Assuming roughly one in 50 retweeting individuals downloads CashApp, Square’s CAC is < $10 dollars.</p>\n<p><img src=\"https://static.tigerbbs.com/dee784888614bff23c414cecae7e5f7e\" tg-width=\"640\" tg-height=\"171\" referrerpolicy=\"no-referrer\"></p>\n<p>Source:CashApp Twitter</p>\n<p>The takehome point from this type of marketing? Cash App is able to climb a more vertical slope of user acquisition at lower cost than challenger and incumbent banks alike.</p>\n<p>ARK Invest estimatesincumbent banks spend an average of $925 dollars on customer acquisition. On Square’s most recent earning’s call, management confirmed their CAC was less than $5 dollars. Said another way, Square’s marketing and customer acquisition is 18,500% higher than your retail bank.</p>\n<p>So how has Square flown under the radar of the massive U.S. banking industry?</p>\n<p>Square’s strategy to largely target unbanked or “under-banked” individuals allowed them to build a platform without drawing the attention of Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM). But Square is now one of the top ten largest ‘banks’ in the United States by market cap, and is expanding its total addressable market to those who are already clients of traditional banks.</p>\n<p>This strategy of finding an underserved population, providing value to those customers, then broadening offerings and selling upmarket is in Square’s DNA. They followed the same playbook on the Seller side, initially targeting small businesses doing less than $100k in GMV, but today Square's fastest growing segment is mid- to large-size businesses.</p>\n<p>Square’s peer Venmo cannot flex the same marketing efficiencies as Cash App. Cash App continues to hold the crown as the most downloaded finance application on Apple’s App Store (AAPL) as well as Google Play Store (GOOG), more popular than Venmo, PayPal Cash, and Robinhood (RBNHD). Furthermore, Square has a full 10X more followers than Venmo on Twitter. These advantages manifest as Square enjoying a healthy gap over Venmo in search as well.</p>\n<p><img src=\"https://static.tigerbbs.com/f0ee1067df9e647949f72f4d772af186\" tg-width=\"640\" tg-height=\"172\" referrerpolicy=\"no-referrer\"></p>\n<p>Source:Similarweb</p>\n<p><img src=\"https://static.tigerbbs.com/df7398ef5a030917f6de3ac8d13fe5a9\" tg-width=\"640\" tg-height=\"394\" referrerpolicy=\"no-referrer\"></p>\n<p>Source: I made this with help fromGoogle Trends</p>\n<p>Perhaps most importantly, although Venmo has more monthly active users (MAU’s), Square is better at<i>monetizing</i>these users.According to RBC Capital analyst DanielPerlin, Venmo garners roughly $12 from each MAU, whereas Cash App brings in $54. And due to industry low CAC, Cash App gets the extra benefit of being more profitable as well.</p>\n<p>While there is much more that can be said about Square and PayPal’s competition in the challenger banking space, it is this customer acquisition and long term value that underlies why I prefer holding shares of Square over PayPal.</p>\n<p>Square is just doing the important things better than Venmo. Part of this is Dorsey's social media advantages, but I believe much if it has to do with the fact that Venmo was acquired by PayPal, whereas Square remains independent. The innovative connective tissue which once held Venmo together and fostered bold ideas and big bets was absorbed into the massive PayPal machine, and lost.</p>\n<p>As a SoFi shareholder and bull, I was disappointed to learn in my research that SoFi has been unable thus far to creatively turn its Twitter presence into a customer acquisition engine. Despite 120k+ followers, the SoFi Twitter page has relatively low engagement and no promotional activities reminiscent of #CashAppFriday. SoFi CEO Anthony Noto coincidentally was formerly COO of Twitter when #CashAppFriday first launched, and I believe he will be able to leverage this experience into a more engaging social media presence. Fortunately for SoFi, their CAC's are low (~$40) with much higher LTV's than Cash App as of now (roughly double, close to $2,000 with cross selling into lending).</p>\n<p><b>Square Financial Services: A Bank For All Mankind</b></p>\n<p>On March 1, 2021, Square announced its banking service had begun operations after completing the charter approval process with the FDIC. This is a massive catalyst for Square’s business, and positions them squarely against the glacially slow incumbent banks.</p>\n<p>I recently wrote adeep dive on SoFi(SOFI), which is also pursuing a bank charter, and discussed the massive benefits these fintech companies inherit by building banking infrastructure. With this banking platform, Square will be able to make loans using deposits on its platform, originate loans to small businesses, and improve profitability.</p>\n<p>About a month ago, an iOS developer namedSteve Moser discovered codeon a Square software update revealing new products “Square Checking” and “Square Savings.” Based on the code, Square is planning to offer 0.5% interest rates for its savings accounts through 2021, a full 8+ times higher than thenational savings account average.</p>\n<p>Square's banking play is a continuation of the playbook that led them to purchase Credit Karma’s tax preparation business in 2020. At the time of the acquisition, roughly 2 million Americans used Karma to file returns, with an average refund of $2k. Those tax returns were then deposited in Cash App accounts, where fintech magic happens. Higher account deposits can be loaned out, drive increased transaction volume, and ultimately elevate the LTV of the user.</p>\n<p>SoFi is doing something similar with its $3k account minimums for SoFi IPO Invest, and Square’s banking venture has the opportunity to both elevate account balances and steal additional customers from incumbent banks.</p>\n<p>And the incumbent banks are terrified. See what Jamie Dimon, CEO of JP Morgan and perhaps the most famous banker in the world has said about Square over the years.</p>\n<blockquote>\n What does the small business want? They wanted to process cash and checks and debit on the same machine. We didn’t give them that opportunity. Square did.\n</blockquote>\n<p>Jamie Dimon, CEO, JP Morgan, Investor Day, 2019</p>\n<p>And more recently when asked if JPM should be scared of challenger banks like Square:</p>\n<blockquote>\n Absolutely we should be scared s---less about that. We’ve just got to get quicker, better, faster.\n</blockquote>\n<p>Jamie Dimon, CEO, JP Morgan, Investor Day, January, 2021</p>\n<p>Most importantly, adding banking services multiplies the LTV of Square's customers, and is a major step towards Cash App becoming a financial super app. The single biggest money maker for individual banking customers is checking and savings accounts. According to an ARK Invest white paper, LTV per retail banking customer is roughly $3,600, of which a full 25%, or $900 is checking and savings accounts.</p>\n<p><img src=\"https://static.tigerbbs.com/2bdfa91840a4611caf6808ad0c4bb076\" tg-width=\"640\" tg-height=\"367\" referrerpolicy=\"no-referrer\"></p>\n<p>Source: ARK Invest, with annotations from me:Cash App vs Venmo</p>\n<p>You can breathlessly hype Square's Bitcoin opportunities and wax poetic about Cash App's booming Bitcoin revenue, but the meat and potatoes is here, right in front of us: Square banking. The weapon Square will use to dethrone the incumbent banks is slowly being drawn from its sheath.</p>\n<p><b>Jack Dorsey's Bitcoin Obsession</b></p>\n<p>For those of you who don't follow Dorsey on Twitter or read updates about the Bitcoin (BTC-USD) 2021 Convention, believe me when I say Jack is<i>convicted</i>about the role Bitcoin will play in the Internet’s future.</p>\n<blockquote>\n If I were not at Square or Twitter, I would be working on bitcoin. If bitcoin needed more help than Square or Twitter, I would leave them for bitcoin.\n</blockquote>\n<p>Jack Dorsey, CEO Square, CEO Twitter,Bitcoin 2021 Conference</p>\n<p>At the conference Dorsey announced Square is considering releasing a hardware Bitcoin wallet. For those unfamiliar, when you purchase cryptocurrency on an exchange, the vast majority of the time it is not actually<i>yours</i>, but is in fact an IOU. If you’ve heard the expression, “Not your keys, not your coins,” this is referring directly to this issue. If you don’t have a hardware wallet with a password only you have access to, then the coins don’t truly belong to you.</p>\n<p>Regarding Square's involvement inBitcoin hardware wallets, color me unimpressed. I was surprised to see Square’s stock pop on that news. I can’t really see a situation where a company doing $20+ Billion a year in sales like Square gets meaningful top or bottom line contribution from a glorified flash drive. It’s just not going to move the needle.</p>\n<p>To be honest, cryptocurrency is the biggest potential blind spot I see right now in Dorsey’s execution. Don’t get me wrong, as a Square shareholder I will<i>gladly accept a</i>1,047% increase year over year in Bitcoin revenue to $3.51 B as of Q1 2021. But Dorsey refusing to allow any other coins on the Cash App platform is, in my opinion, the wrong choice for Square and cryptocurrency in general. I have already heard several friends comment they see no role for Cash App because its “crypto features” only allow for Bitcoin trading.</p>\n<p>“That’s why we don’t deal with any other ‘currencies’ or ‘coins’ because we’re so focused on making bitcoin the native currency for the internet,”</p>\n<p>-Jack Dorsey, CEO Square</p>\n<p>Effectively, Dorsey is limiting features for Square’s Cash App users to focus all attention on Bitcoin. But that’s not really how cryptocurrency works – over the past several years the market share of Bitcoin has declined slightly as new platforms have generated interest and ease of investing in alternative coins. Diversity of coin options coincided with Bitcoin reaching its highest market capitalization of all time. I believe there is space for more than one coin in the future, and am personally invested in Ethereum (ETH-USD) due to the utility it offers as the nexus of Internet 3.0.</p>\n<p>I would love to see Dorsey developing revenue-driving crypto services such as decentralized finance for Square. I said this for SoFi, and I will say it again for Square: a staking system, by which users are granted upsize interest for holding Bitcoin in their Cash App, for example, would dramatically elevate Cash App’s value proposition. This is something for all challenger banks to explore and invest in, and it is a game changer.</p>\n<p>All that said, Square has a history of surprising analysts and investors with clever solutions that delight customers. Bitcoin and the cryptocurrency landscape<i>needs</i>innovation and development, and Square is well capitalized in cash and intellect to address this issue.</p>\n<p><b>Square's Near Term Risks</b></p>\n<p>Despite how positive I feel about Square's long-term positioning in the fintech space, I would be remiss if I did not alert you to several considerable near term risks. Square is hurtling towards challenging 2020 comps, with Q2 2020 being the first quarter of government disbursement checks. While I expect Square to post excellent Seller and Cash App numbers, growth will inherently moderate. Furthermore, Cash App benefited from Robinhood's well-publicized meltdown in Q1, as retail investors searched for more transparent and reliable trading platforms. This resulted in a pull-forward of user growth, and I do not believe this is sustainable or reflective of Cash App's long term user growth rates.</p>\n<p>Furthermore, Square's Q1 2021 shareholder letter was chock full of new operating expense forecasts for Q2. Square promised stock based compensation would rise materially in Q2 as new hirings occurred (in Q1 was $118 million), an increase in product development and G&A by $120 million, as well as an increase in transaction and loan losses by $40 million.</p>\n<p>A potential bright spot is Square's investment in DoorDash (DASH), which was a catalyst for Square's blowout Q4 2020 earnings. Based on a price of $168.5/share at the time of this writing, DoorDash's stock has appreciated 28.5% since Q1 end. That equates to a $65 million appreciation in Square's DoorDash equity ownership.</p>\n<p>Even still, netting out equity appreciation and Square's guided opex expansion, Square is guiding for roughly $110 million in additional Q2 spend. This is significant for a company that earned only $39 million last quarter, and Q1 was already benefiting from stimulus check disbursement and peak Bitcoin price and volatility.</p>\n<p>And that brings us to Bitcoin, of which Square owns 8,027 coins.</p>\n<p>Bitcoin's price at the conclusion of Q1 (March 31, 2021) was $58,724. At the time of this writing, one Bitcoin is valued at $32,270, or a 45% drop from the prior quarter.</p>\n<p><b>This is a loss of $259 million on Bitcoin alone in Q2, 2021.</b></p>\n<p>Gulp. All in, these costs will result in an estimated $370 million drag on Square's Q2 earnings. Despite these facts, consensus estimates for Square indicate the investment community believes Square will be<i>profitable</i>this quarter, with 86% earnings revisions up over the past three months. I would be shocked if Square turned a profit this next quarter.</p>\n<p>Accordingly, if you are considering a position in Square, this might be a good indication to wait on the sidelines and see how the next earnings call plays out. As a long term Square shareholder I will continue to hold, as none of these issues impacts my long term bullish stance on Square. I believe Bitcoin will recover over the balance of 2021, and Square's investments in product development and talent acquisition are necessary for the battle ahead with legacy banks.</p>\n<p><b>Concluding Thoughts</b></p>\n<p>The holy grail of the fintech space is low customer acquisition cost. Dorsey’s mastery of viral social media advertising generating low CAC's has been a primary catalyst of Square’s titanic growth rates. Square is just beginning to combine and integrate Cash App and Seller, which will manifest as increased user LTV and strengthening network effects.</p>\n<p>Between Square cross-selling Cash App and Seller, solidifying a banking presence with Square banking and the development and implementation of much-needed crypto services, Square will be the apex presence in the fintech space, with no natural predators. I believe this not only possible, but likely. As the future fintech king, Square has a vast ocean of opportunity ahead, because in the multi-trillion financial services space, winner takes most.</p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Square: Winner Takes Most</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nSquare: Winner Takes Most\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-06-22 17:04 GMT+8 <a href=https://seekingalpha.com/article/4435869-square-winner-takes-most><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nArguably the most important fintech metric is customer acquisition cost (CAC). Square’s mastery of viral marketing results in the lowest CAC in the digital wallet space. This is a moat.\n...</p>\n\n<a href=\"https://seekingalpha.com/article/4435869-square-winner-takes-most\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"SQ":"Block"},"source_url":"https://seekingalpha.com/article/4435869-square-winner-takes-most","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1188931868","content_text":"Summary\n\nArguably the most important fintech metric is customer acquisition cost (CAC). Square’s mastery of viral marketing results in the lowest CAC in the digital wallet space. This is a moat.\nSquare is building massive ecosystems in Cash App and Seller that are just beginning to overlap, which results in massive cross-selling opportunities and network effects.\nSquare banking is a major catalyst that has not received sufficient attention from analysts or investors.\nSquare has spent an entire year building as-of-yet unannounced Square Checking and Square Banking products. This is a shot across the bow at incumbent banks, and indicates Square is ready for a higher level of fintech warfare.\nSquare’s future relationship with crypto remains undercooked, and Dorsey’s overfocus on Bitcoin to the exclusion of alternative coins is an uncommon mistake.\n\nSquare's Investment Thesis\nWhen I begin researching a company for an article, I always start with the CEO. For as much as I know about balance sheets and technical analysis, it is the CEO that I am most critical and analytical about.\nThis is reflected in the types of companies I invest in and write about. Opendoor (OPEN), SoFi (SOFI), Zillow (Z) and Palantir (PLTR) are each led by visionary CEO’s, with colorful histories who make massive contributions to their industries. In my opinion, the story behind these disruptive companies and the CEOs who lead them can inform investment decisions as surely as an earnings report.\nWriting this article began no differently. Jack Dorsey, the $15 Billion dollar man who leads both Square (SQ) and Twitter (TWTR), is one of Wall Street’s biggest eccentricities. He has a penchant for meditating, facial hair, intermittent fasting, 80+ minute morning walks and wields an invisible armor that has allowed him to endure a decade of investors ranting he over-focuses on Square to the detriment of Twitter (sorry Twitter longs).\nToday, we will dive into Square – its competitive advantages over neo-banking peers and incumbents alike, Square's banking opportunity, as well as an update on Square’s cryptocurrency initiatives. Square is the best positioned company in the digital wallet space, and Jack's advertising expertise gained by founding and running Twitter has allowed Square to deploy viral marketing campaigns to fuel absurd growth in Cash App. Cash App's success is rivaled only by Square's Seller ecosystem, and these two businesses are just beginning to combine, interact and compound.\nWe're going to talk about all of this here. But first, I want to share a story about how a young Square, in its first years as a company, suffered a direct Amazon (AMZN) salvo and somehow emerged stronger.\nHow Square Survived An Amazon Siege\nBookstores, brick and mortal retail, supermarkets, meal-kits, enterprise cloud, the list of industries Amazon has bled out and internalized stretches on.\nAmazon has earned the moniker, “The Death Star.”Bought and paid for it. Over the past two decades no other company has so pervasively and efficiently disrupted legacy industries.\nAs a brief anecdote, in his early days at Amazon, CEO and founder Jeff Bezos was always searching for ways to eliminate company overhead. In his mind, the less Amazon spent on operations, the more savings could be passed on to Amazon customers.\nIn this vein, instead of purchasing a fancy desk for his office, Bezos built his own out of a recycled door and some two by fours. This practice caught on, and Amazon's employees participated broadly by building their own desks out of wooden doors.\nThe wooden door initiative served two purposes: 1) it was a cultural commitment to humility, from the top down, and 2) it emphasized the importance of spending money only on initiatives that improve the customer experience.\nThere's a picture of Bezos working away on his door deskhere. I’m tempted to frame this photograph, and I probably would if my fiancé would let me. Just confirmed, she says no. But I love this combined concept of customer obsession and frugality.\nFrom a capital allocation, leadership, and customer-centric perspective, it’s easy to look back now and recognize how Amazon became the goliath it is today. Bezos may not look it, but he is a ruthless, patient CEO whose basilisk gaze you pray doesn’t fall on your industry.\nSo when Amazon turned its cannons on a private, relatively small payment processing company named Square in 2014, you didn’t have to be a rocket scientist to know who would be left standing after the dust settled.\nBut if you assumed it would be Amazon, you would have been wrong.\n“Amazon Register” was built to kill Square. It undercut Square’s pricing by 30% and offered live customer service (which Square did not have). Even by Square co-founderJim McKelvey’s own admission, Amazon’s product worked better than Square’s ‘dongle’ did (I hate that word as much as you do and I promise to not use it again).\nBut Square survived. Thrived in fact. Square continued to execute along the same playbook, launched new features like Square Capital to the innovation stack, and grew roughly 10% week over week that year. Amazon, for all its strength, could not compete with Square in offerings, and small businesses were understandably skeptical about partnering with Amazon.\nAfter the year-long siege, on October 30, 2015, Amazon gracefully bowed out, announcing they were shuttering Amazon Register. When the hardware was officially discontinued in early 2016, Amazon mailed a white Square card reader to each of its business customers.\nAnd the rest is history.\nSince Square’s IPO in 2015, the company has continued to fend off fearsome competitors such as Intuit (INTU), PayPal (PYPL), and Shopify (SHOP), not to mention the largest banking systems in the world. Square has ridden a wave of timely and engaging financial innovations to a market cap of $107 Billion at the time of this writing. Cash App’s growth has been an absolute rocket ship, and Dorsey is delivering on the long term vision of connecting Seller and Cash App to one, unified ecosystem.\nSquare’s Moat: Customer Acquisition Cost\nIn the banking space, the company that optimizes lifetime value [LTV] vs customer acquisition cost [CAC] is the company that wins.\nRead that again, write it down, bold it and underline it.\nThis is not supernatural. Behind the B-school terminology is a basic principle of unit economics: make more from a customer than it costs to acquire them, and do it better than competitors.\nOf all the participants in the banking ecosystem, I believe Square has the lowest customer acquisition costs. This is a major part of the Dorsey value proposition, and misunderstood.\nAs founder and CEO of both Square and Twitter, Dorsey has been able to leverage his incredibly nuanced understanding of viral communication to inform viral marketing. Starting in 2017, Twitter mediated campaigns like #CashAppFriday, in which Square offers thousands of dollars to Twitter users who post their Cash App handle, has drawn massive numbers of comments, retweets and Cash App downloads. Partnerships with engaging content developers like the Joe Rogan Experience, Lex Fridmen, Burger King, Travis Scott and Lil B have continued to drive brand awareness. This brand awareness is critical, especially in a crowded digital banking space.According to this study, 82% of app or internet searchers choose a familiar brand for the first click.\nAs an example of viral and opportunistic marketing, in 2018 a prominent content creator on TikTok, “Shiggy” released a SoundCloud song about Cash App. After striking a sponsorship deal with Shiggy in 2019, the Cash App marketing team edited a shorter version of the single, and reached out to TikTok influencers with the below message:\n\n Create a TikTok with your best interpretation of the catchy song in everyday situations. And use hashtag #CashAppThatMoney.\n\nSource:Business Insider\nTo date, the Shiggy Cash App song has beenused in 9,138 videos. Prominent TikTok influencers such as Addison Rae (81+ million followers) have leveraged their massive platforms to drive hundreds of millions of views.\nLook at the below tweet I found from Cash App on May 7thof this year. By leveraging Cash App’s 1.2 million Twitter followers, $5k in marketing spend and goodwill resulted in 17.4k comments and 26.7k retweets. Those retweets create a reverberation in the Twitter ecosystem and result in a geometric increase in captive eyeballs. Now I am not a TikTok'er and I started a Twitter account within the past month, but it's important to appreciate Square's masterful use of these millennial and Gen Z driven platforms. Assuming roughly one in 50 retweeting individuals downloads CashApp, Square’s CAC is < $10 dollars.\n\nSource:CashApp Twitter\nThe takehome point from this type of marketing? Cash App is able to climb a more vertical slope of user acquisition at lower cost than challenger and incumbent banks alike.\nARK Invest estimatesincumbent banks spend an average of $925 dollars on customer acquisition. On Square’s most recent earning’s call, management confirmed their CAC was less than $5 dollars. Said another way, Square’s marketing and customer acquisition is 18,500% higher than your retail bank.\nSo how has Square flown under the radar of the massive U.S. banking industry?\nSquare’s strategy to largely target unbanked or “under-banked” individuals allowed them to build a platform without drawing the attention of Wells Fargo (WFC), Bank of America (BAC), and JPMorgan Chase (JPM). But Square is now one of the top ten largest ‘banks’ in the United States by market cap, and is expanding its total addressable market to those who are already clients of traditional banks.\nThis strategy of finding an underserved population, providing value to those customers, then broadening offerings and selling upmarket is in Square’s DNA. They followed the same playbook on the Seller side, initially targeting small businesses doing less than $100k in GMV, but today Square's fastest growing segment is mid- to large-size businesses.\nSquare’s peer Venmo cannot flex the same marketing efficiencies as Cash App. Cash App continues to hold the crown as the most downloaded finance application on Apple’s App Store (AAPL) as well as Google Play Store (GOOG), more popular than Venmo, PayPal Cash, and Robinhood (RBNHD). Furthermore, Square has a full 10X more followers than Venmo on Twitter. These advantages manifest as Square enjoying a healthy gap over Venmo in search as well.\n\nSource:Similarweb\n\nSource: I made this with help fromGoogle Trends\nPerhaps most importantly, although Venmo has more monthly active users (MAU’s), Square is better atmonetizingthese users.According to RBC Capital analyst DanielPerlin, Venmo garners roughly $12 from each MAU, whereas Cash App brings in $54. And due to industry low CAC, Cash App gets the extra benefit of being more profitable as well.\nWhile there is much more that can be said about Square and PayPal’s competition in the challenger banking space, it is this customer acquisition and long term value that underlies why I prefer holding shares of Square over PayPal.\nSquare is just doing the important things better than Venmo. Part of this is Dorsey's social media advantages, but I believe much if it has to do with the fact that Venmo was acquired by PayPal, whereas Square remains independent. The innovative connective tissue which once held Venmo together and fostered bold ideas and big bets was absorbed into the massive PayPal machine, and lost.\nAs a SoFi shareholder and bull, I was disappointed to learn in my research that SoFi has been unable thus far to creatively turn its Twitter presence into a customer acquisition engine. Despite 120k+ followers, the SoFi Twitter page has relatively low engagement and no promotional activities reminiscent of #CashAppFriday. SoFi CEO Anthony Noto coincidentally was formerly COO of Twitter when #CashAppFriday first launched, and I believe he will be able to leverage this experience into a more engaging social media presence. Fortunately for SoFi, their CAC's are low (~$40) with much higher LTV's than Cash App as of now (roughly double, close to $2,000 with cross selling into lending).\nSquare Financial Services: A Bank For All Mankind\nOn March 1, 2021, Square announced its banking service had begun operations after completing the charter approval process with the FDIC. This is a massive catalyst for Square’s business, and positions them squarely against the glacially slow incumbent banks.\nI recently wrote adeep dive on SoFi(SOFI), which is also pursuing a bank charter, and discussed the massive benefits these fintech companies inherit by building banking infrastructure. With this banking platform, Square will be able to make loans using deposits on its platform, originate loans to small businesses, and improve profitability.\nAbout a month ago, an iOS developer namedSteve Moser discovered codeon a Square software update revealing new products “Square Checking” and “Square Savings.” Based on the code, Square is planning to offer 0.5% interest rates for its savings accounts through 2021, a full 8+ times higher than thenational savings account average.\nSquare's banking play is a continuation of the playbook that led them to purchase Credit Karma’s tax preparation business in 2020. At the time of the acquisition, roughly 2 million Americans used Karma to file returns, with an average refund of $2k. Those tax returns were then deposited in Cash App accounts, where fintech magic happens. Higher account deposits can be loaned out, drive increased transaction volume, and ultimately elevate the LTV of the user.\nSoFi is doing something similar with its $3k account minimums for SoFi IPO Invest, and Square’s banking venture has the opportunity to both elevate account balances and steal additional customers from incumbent banks.\nAnd the incumbent banks are terrified. See what Jamie Dimon, CEO of JP Morgan and perhaps the most famous banker in the world has said about Square over the years.\n\n What does the small business want? They wanted to process cash and checks and debit on the same machine. We didn’t give them that opportunity. Square did.\n\nJamie Dimon, CEO, JP Morgan, Investor Day, 2019\nAnd more recently when asked if JPM should be scared of challenger banks like Square:\n\n Absolutely we should be scared s---less about that. We’ve just got to get quicker, better, faster.\n\nJamie Dimon, CEO, JP Morgan, Investor Day, January, 2021\nMost importantly, adding banking services multiplies the LTV of Square's customers, and is a major step towards Cash App becoming a financial super app. The single biggest money maker for individual banking customers is checking and savings accounts. According to an ARK Invest white paper, LTV per retail banking customer is roughly $3,600, of which a full 25%, or $900 is checking and savings accounts.\n\nSource: ARK Invest, with annotations from me:Cash App vs Venmo\nYou can breathlessly hype Square's Bitcoin opportunities and wax poetic about Cash App's booming Bitcoin revenue, but the meat and potatoes is here, right in front of us: Square banking. The weapon Square will use to dethrone the incumbent banks is slowly being drawn from its sheath.\nJack Dorsey's Bitcoin Obsession\nFor those of you who don't follow Dorsey on Twitter or read updates about the Bitcoin (BTC-USD) 2021 Convention, believe me when I say Jack isconvictedabout the role Bitcoin will play in the Internet’s future.\n\n If I were not at Square or Twitter, I would be working on bitcoin. If bitcoin needed more help than Square or Twitter, I would leave them for bitcoin.\n\nJack Dorsey, CEO Square, CEO Twitter,Bitcoin 2021 Conference\nAt the conference Dorsey announced Square is considering releasing a hardware Bitcoin wallet. For those unfamiliar, when you purchase cryptocurrency on an exchange, the vast majority of the time it is not actuallyyours, but is in fact an IOU. If you’ve heard the expression, “Not your keys, not your coins,” this is referring directly to this issue. If you don’t have a hardware wallet with a password only you have access to, then the coins don’t truly belong to you.\nRegarding Square's involvement inBitcoin hardware wallets, color me unimpressed. I was surprised to see Square’s stock pop on that news. I can’t really see a situation where a company doing $20+ Billion a year in sales like Square gets meaningful top or bottom line contribution from a glorified flash drive. It’s just not going to move the needle.\nTo be honest, cryptocurrency is the biggest potential blind spot I see right now in Dorsey’s execution. Don’t get me wrong, as a Square shareholder I willgladly accept a1,047% increase year over year in Bitcoin revenue to $3.51 B as of Q1 2021. But Dorsey refusing to allow any other coins on the Cash App platform is, in my opinion, the wrong choice for Square and cryptocurrency in general. I have already heard several friends comment they see no role for Cash App because its “crypto features” only allow for Bitcoin trading.\n“That’s why we don’t deal with any other ‘currencies’ or ‘coins’ because we’re so focused on making bitcoin the native currency for the internet,”\n-Jack Dorsey, CEO Square\nEffectively, Dorsey is limiting features for Square’s Cash App users to focus all attention on Bitcoin. But that’s not really how cryptocurrency works – over the past several years the market share of Bitcoin has declined slightly as new platforms have generated interest and ease of investing in alternative coins. Diversity of coin options coincided with Bitcoin reaching its highest market capitalization of all time. I believe there is space for more than one coin in the future, and am personally invested in Ethereum (ETH-USD) due to the utility it offers as the nexus of Internet 3.0.\nI would love to see Dorsey developing revenue-driving crypto services such as decentralized finance for Square. I said this for SoFi, and I will say it again for Square: a staking system, by which users are granted upsize interest for holding Bitcoin in their Cash App, for example, would dramatically elevate Cash App’s value proposition. This is something for all challenger banks to explore and invest in, and it is a game changer.\nAll that said, Square has a history of surprising analysts and investors with clever solutions that delight customers. Bitcoin and the cryptocurrency landscapeneedsinnovation and development, and Square is well capitalized in cash and intellect to address this issue.\nSquare's Near Term Risks\nDespite how positive I feel about Square's long-term positioning in the fintech space, I would be remiss if I did not alert you to several considerable near term risks. Square is hurtling towards challenging 2020 comps, with Q2 2020 being the first quarter of government disbursement checks. While I expect Square to post excellent Seller and Cash App numbers, growth will inherently moderate. Furthermore, Cash App benefited from Robinhood's well-publicized meltdown in Q1, as retail investors searched for more transparent and reliable trading platforms. This resulted in a pull-forward of user growth, and I do not believe this is sustainable or reflective of Cash App's long term user growth rates.\nFurthermore, Square's Q1 2021 shareholder letter was chock full of new operating expense forecasts for Q2. Square promised stock based compensation would rise materially in Q2 as new hirings occurred (in Q1 was $118 million), an increase in product development and G&A by $120 million, as well as an increase in transaction and loan losses by $40 million.\nA potential bright spot is Square's investment in DoorDash (DASH), which was a catalyst for Square's blowout Q4 2020 earnings. Based on a price of $168.5/share at the time of this writing, DoorDash's stock has appreciated 28.5% since Q1 end. That equates to a $65 million appreciation in Square's DoorDash equity ownership.\nEven still, netting out equity appreciation and Square's guided opex expansion, Square is guiding for roughly $110 million in additional Q2 spend. This is significant for a company that earned only $39 million last quarter, and Q1 was already benefiting from stimulus check disbursement and peak Bitcoin price and volatility.\nAnd that brings us to Bitcoin, of which Square owns 8,027 coins.\nBitcoin's price at the conclusion of Q1 (March 31, 2021) was $58,724. At the time of this writing, one Bitcoin is valued at $32,270, or a 45% drop from the prior quarter.\nThis is a loss of $259 million on Bitcoin alone in Q2, 2021.\nGulp. All in, these costs will result in an estimated $370 million drag on Square's Q2 earnings. Despite these facts, consensus estimates for Square indicate the investment community believes Square will beprofitablethis quarter, with 86% earnings revisions up over the past three months. I would be shocked if Square turned a profit this next quarter.\nAccordingly, if you are considering a position in Square, this might be a good indication to wait on the sidelines and see how the next earnings call plays out. As a long term Square shareholder I will continue to hold, as none of these issues impacts my long term bullish stance on Square. I believe Bitcoin will recover over the balance of 2021, and Square's investments in product development and talent acquisition are necessary for the battle ahead with legacy banks.\nConcluding Thoughts\nThe holy grail of the fintech space is low customer acquisition cost. Dorsey’s mastery of viral social media advertising generating low CAC's has been a primary catalyst of Square’s titanic growth rates. Square is just beginning to combine and integrate Cash App and Seller, which will manifest as increased user LTV and strengthening network effects.\nBetween Square cross-selling Cash App and Seller, solidifying a banking presence with Square banking and the development and implementation of much-needed crypto services, Square will be the apex presence in the fintech space, with no natural predators. I believe this not only possible, but likely. As the future fintech king, Square has a vast ocean of opportunity ahead, because in the multi-trillion financial services space, winner takes most.","news_type":1},"isVote":1,"tweetType":1,"viewCount":532,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0},{"id":167933557,"gmtCreate":1624241843979,"gmtModify":1703831329842,"author":{"id":"3585618131873923","authorId":"3585618131873923","name":"Geant","avatar":"https://static.tigerbbs.com/4c927c4614090da5a1ecd981332db3c3","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"3585618131873923","authorIdStr":"3585618131873923"},"themes":[],"htmlText":"Like and comment thanks","listText":"Like and comment thanks","text":"Like and comment thanks","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":4,"commentSize":1,"repostSize":0,"link":"https://ttm.financial/post/167933557","repostId":"1110026756","repostType":4,"isVote":1,"tweetType":1,"viewCount":720,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}
