4. Square, Inc. (NYSE: SQ)
Number of hedge fund holders: 89
Square, Inc. (NYSE: SQ) is a California-based company primarily in the digital payments business. It was founded in 2009 and is ranked fourth on our list of 10 best crypto stocks to buy amid hedge fund interest. Square has a market cap of more than $112 billion and posted more than $9.5 billion in annual revenue in December 2020, up from $4.7 billion the year before. Square has pioneered digital payments products over the past two decades, including bank card readers for mobiles and point of sale devices for retailers.
On April 20, investment advisory Rosenblatt forecast a positive outlook for Square in 2021 after a record 302% share price surge over the past twelve months. The advisory highlighted Square as a top payments industry stock for the year with a 30% upside potential. In October last year, Square had invested close to $50 million in Bitcoin and called it the currency of the future.
At the end of the fourth quarter of 2020, 89 hedge funds in the database of Insider Monkey held stakes worth $8.8 billion in the firm, up from 73 in the preceding quarter worth $6.5 billion.
RiverPark Large Growth Fund, in their Q1 2021 investor letter, mentioned Square, Inc. (NYSE: SQ). Here is what RiverPark Large Growth Fund has to say about Square, Inc. in their Q1 2021 investor letter:
“We established a position in leading Financial Technology provider Square during the quarter. Through one integrated system, SQ is a hybrid of two businesses: its Seller Business (charging small and medium-sized businesses about 3% for transaction payment processing, plus other services such as instant funds access, and software for everything from customer engagement to payroll), and its Cash App (originally for person-to-person cash transfers and now a growing digital financial services provider for consumers).
The combined business has grown gross profit at a 37% CAGR over the past five years to $2.7 billion (due to pass through costs, gross profit is more reflective of top-line growth) and we believe that the company has an enormous long-term runway, as it has less than a 2% share of a more than $160 billion market. It is our view that the company’s Cash App (which has grown
from nothing in 2015 to $1.2 billion gross profit last year) has a particularly large opportunity with its powerful ecosystem of digital financial services including digital wallets, direct deposits, stock trading, bitcoin trading, and business and tax services, which are all relatively new. The vast majority of Cash App’s more than 36 million users are younger and, importantly, are willing to replace their bank and other financial services accounts with the app.We estimate that the company can grow its gross profit more than 30% and EBITDA more than 50% annually for the foreseeable future, and while most of the company’s current profit is from its Seller Business, we believe most of Square’s future value will be from its Cash App business.”
