This is a step-by-step stock review to answer the question, is Square (SQ) stock a good buy?
This article will teach you how to use the 4Ms of investing. This will be a detailed walkthrough to show you how the 4Ms work and why they are important. If you are interested, you can log into Tykr to use the 4M Confidence Booster (Powered by OpenAI) which will allow you to complete a 4M Analysis in less than 60 seconds.
What are the 4Ms?
- MOS (Margin of Safety) – The MOS is the math part of investing which includes the Summary, Score, and MOS (Margin of Safety).
- Meaning – The meaning is the business model and how scalable the revenue streams are.
- Moat – The moat is how the business compares to other companies in the same Sector and Industry.
- Management – The management is the track record of the CEO.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
Table of Contents
The following links will direct you to key topics to help answer the question, is Square (SQ) stock a good buy?
1. Square Company History
When investing in stocks, it’s important to know the company’s history. This helps us understand the various revenue streams, if they acquired other companies, how they grew through difficult times, and how they separated themselves from the competition.
- Founded: 2009 by Jack Dorsey and Jim McKelvey
- Inspiration: Jim McKelvey couldn’t sell a glass faucet due to lack of a credit card payment system
- Launch: 2010 with a small, square-shaped credit card reader
- Growth: Quickly expanded to offer Point-of-Sale (POS) systems, online payments, and business management tools
- Milestone: Went public in 2015, listed on NYSE under SQ
- Innovations: Introduced Square Cash (now Cash App) in 2013, allowing peer-to-peer payments
- Acquisitions: Acquired several companies including Weebly (2018) and Afterpay (2021)
- Rebranding: Renamed parent company to Block, Inc. in 2021 to reflect expansion into blockchain technology
- Current Reach: Operates globally, supporting millions of businesses and individual users
- Impact: Revolutionized the payment processing industry, empowering small businesses and entrepreneurs
2. MOS (Margin of Safety)
When investing in a company, the first step is to look at the financials. Fortunately, Tykr does this for us automatically. The higher the score, the stronger the financials and the safer the investment. The higher the MOS, the higher the potential returns you can make.
- Summary: overpriced
- Score: 22/100
- MOS: 1%
To see the most up-to-date Summary, Score, and MOS, please log into Tykr.
3. Meaning
When investing in a company, it’s important to know how a company makes money. A mature business model has multiple streams of revenue which allow the company to weather downturns in the economy.
Here is how Square (SQ) makes money:
- Transaction Fees: Charges a percentage fee on each transaction processed through its payment system.
- Subscription Services: Offers paid subscriptions for software services like Square for Restaurants, Square for Retail, and appointment scheduling.
- Hardware Sales: Sells point-of-sale hardware such as card readers, terminals, and registers.
- Cash App: Generates revenue through transaction fees, instant transfer fees, and Bitcoin trading within the Cash App.
- Business Loans: Earns interest and fees from small business loans through Square Capital.
- E-Commerce Solutions: Provides online payment processing and website building services for a fee.
- Financial Services: Offers banking services like Square Savings and Square Checking, earning money from account fees and interest.
- Marketing Services: Charges for email marketing and customer engagement tools.
Square uses these various streams to maximize their earnings and provide diverse services to moviegoers.
Here are a few of the other companies that Square has acquired over the years. This is important because a company will use a “Buy before build” philosophy to go to market faster and add additional streams of revenue. A company with more revenue streams has a more stable business model. Keep in mind, that most companies don’t build new software because it takes too long to go to market and generate revenue.
- Weebly
- Afterpay
4. Moat
When investing in a company, it’s important to understand how a company ranks against other companies in the same sector and industry. Based on the Score, here is how Square (SQ) stacks up against other companies.
- China Leon Inspection Holding Limited. (1586) – 72
- Pico Far East Holdings Limited. (0752) – 72
- Left Field Printing Group Limited. (1540) – 67
- Sun Hing Printing Holdings Limited. (1975)
- Xinhua News Media Holdings Limited. (0309) – 55
- C-Link Squared Limited. (1463) – 22
To see the most up-to-date Summary, Score, and MOS and each stock, please log into Tykr.
5. Management
When investing in a company, it’s important to understand who the CEO is, what they have accomplished in the past, and how they have helped this company grow. Good leaders typically have stronger cultures, less turnover, and better returns in the stock market.
- Founding Square:Jack Dorsey Co-founded Square in 2009, revolutionizing mobile payments with a simple card reader.
- Disruptive Innovation: Introduced Square’s first product, a small, square-shaped credit card reader that plugged into smartphones, democratizing payment processing for small businesses.
- Expanding Services: Expanded Square beyond card payments to offer a full suite of financial tools, including Square Cash (now Cash App) for peer-to-peer payments.
- Public Listing: Led Square through its initial public offering (IPO) in 2015, enhancing its visibility and investor confidence.
- Diversification: Diversified Square’s offerings to include Square for Restaurants and Square for Retail, tailored solutions for specific industries.
- Acquisitions: Oversaw strategic acquisitions like Weebly and Afterpay, expanding Square’s capabilities in e-commerce and buy-now-pay-later services.
- Innovative Leadership: Championed innovation in financial technology, continually pushing boundaries with new features and services.
- Global Reach: Expanded Square’s presence globally, making it a trusted partner for millions of businesses worldwide.
Jack Dorsey’s leadership at Square has been marked by pioneering innovations and strategic expansions, making Square a leader in the fintech industry and transforming how businesses handle transactions.
6. 4M Score
All of our homework on this company leads up to the 4M Score. A lot of investors only look at the numbers. Yes, it’s important to look at the first M (MOS) which is the math part of investing but it’s also important to look past the numbers and also look at the Meaning, Moat, and Management. If all 4Ms pass, we should have high confidence in buying this stock.
What 4M score are we going for?
- 80-100 = High confidence – Yay! You should have high confidence buying this stock. It passes all 4M!
- 60-79 = Moderate confidence – Alert! There may be better stocks in the market. Only buy this stock if you truly believe the company will improve!
- 0-59 = Low confidence – Warning! There are better stocks in the market. Due to the low score, you should consider looking at other stocks.
👉 The 4M Score of Square (SQ) is 34/100.
To see the most up-to-date 4M Score, please log into Tykr.
7. Is Square (SQ) stock a good buy?
Some of the top questions investors can have is Square (SQ) stock a good buy or should I buy Square (SQ) stock?
Square is a compelling investment due to its innovative leadership in fintech solutions. As a pioneer in mobile payment processing, Square has revolutionized how businesses handle transactions with its user-friendly tools and wide-reaching platform. With diverse revenue streams from transaction fees, subscription services, and the popular Cash App, Square demonstrates resilience and growth potential in the competitive financial technology sector. However, potential investors should consider market volatility and competition as factors that could impact Square’s stock performance. Overall, Square’s strategic expansions, robust technology, and ability to adapt to evolving consumer needs position it as a promising investment opportunity in the digital payments landscape.
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To truly know if Square (SQ) is a good stock to buy or sell, we recommend you log into Tykr. Within seconds you can see the Summary, Score, MOS, and 4M Score.
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The Summary, Score, and MOS of this stock may have changed since the posting of this review. Please login to Tykr to see up-to-date information.