We recently published a list of 10 Best Cash App Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other best cash app stocks to buy according to hedge funds.
The mobile payment service Cash App has grown significantly throughout the years, and in 2022 it was valued at $138 billion, up from $40 billion in 2020. Although its earnings increased to $2.95 billion, showing consistent yearly growth since 2018, its revenue decreased to $10.6 billion in 2022 from $12.3 billion in 2021, despite this remarkable valuation. Cash App’s user base grew by 7 million from 2021 to 51 million in 2022, due to its user-friendly interface and array of financial services, which include peer-to-peer payments, Bitcoin investments, and cash card features. The four U.S. states of Texas, California, Florida, and New York together account for 48.75% of Cash App’s user base, with over half of its customers concentrated in these states. As of 2020, there were just 10,000 active Android users in the United Kingdom, and its market share was less than 0.05%. In 2022, the platform handled more than 528 million transactions, demonstrating its increasing use. Cash App is positioned as a major participant in the digital payment ecosystem, particularly in the U.S. market, due to its excellent features and rising profitability.
As per findings by Apptopia, Cash App was the most downloaded payment app between April and May 2020, with a 20.1% increase in U.S. downloads, reaching around 4 million within that time frame. Additionally, usage increased, with roughly 250 million sessions in April—the second-highest number among payment applications. As people looked for alternatives to in-person banking and provided financial support to friends and family, the pandemic caused a shift toward digital transactions, which is what is responsible for this surge.
According to Block, Cash App’s parent company, in a manner that many financial institutions have not been able to, Cash App has expanded access to the financial system and enabled a wide range of consumers to send, spend, save, invest, and comprehend their money more effectively. Its goal is to “redefine the world’s relationship with money by making it more relatable, instantly available, and universally accessible,” which is in line with this. Block believes Cash App can keep improving the economy both today and in the future.
However, Cash App has also faced challenges. Recently, under Jack Dorsey’s leadership, Block agreed to a $175 million settlement with the CFPB, which included a $55 million fine and up to $120 million in reimbursements for Cash App users. Allegations of widespread fraud and insufficient customer service on the platform were addressed in the settlement. The CFPB charged Cash App with facilitating fraud, sending users to banks, and neglecting to look into questionable transactions. Cash App accounted for over half of Block’s 2023 gross profit, with over 56 million accounts. In addition, after 48 state regulators joined together, Block paid an $80 million fine for money laundering violations.
The press release stated:
“While we strongly disagree with the CFPB’s mischaracterizations, we made the decision to settle this matter in the interest of putting it behind us and focusing on what’s best for our customers and our business,”
Methodology
For this article, we reviewed multiple reliable websites and videos that discuss stocks available on Cash App. From there, we formed an initial list of the 20 Best Cash App Stocks To Buy According to Hedge Funds. From the resultant dataset, we chose 10 stocks with the highest number of hedge fund investors, using Insider Monkey’s database of 900 hedge funds in Q3 2024 to gauge hedge fund sentiment for stocks.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (see more details here)
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Over the years, its strong Services business segment has grown to include Apple Wallet and Apple Pay, which allow consumers to manage payments from their iPhones.
By concentrating on a high-end, intricately linked ecosystem of goods, services, and software, Apple Inc. (NASDAQ:AAPL) has strengthened its long-term dominance in the consumer electronics sector. This ecosystem revolves around Apple’s flagship iPhone, which generates 46% of the company’s net sales. Giving it pricing power, switching costs, and network effects as a result. Retaining consumers inside this walled garden maximizes the benefits of all other Apple services and products. This approach gives the company room to flourish and sets it apart.
For the September quarter in Q4 of 2024, Apple Inc. (NASDAQ:AAPL) reported record revenue of $94.9 billion, up 6% year over year. This was driven by strong iPhone revenue of $46.2 billion, which climbed 6% and set a record for the September quarter across all geographic areas. Over 1 billion paid memberships throughout the firm’s ecosystem contributed to a double-digit increase in services revenue, which hit a record high of $25 billion, up 12% year over year. The Apple Intelligence system, iPhone 16, Mac with M4 chips, new iPads, and improvements for the Apple Watch and AirPods were among the advances the company introduced. Furthermore, Apple broke revenue records in emerging markets, with the September quarter seeing an all-time high in India.
In terms of the environment, Apple Inc. (NASDAQ:AAPL) made progress toward its goal of becoming carbon-neutral throughout its whole footprint by 2030 by launching the first-ever carbon-neutral Mac and a carbon-neutral Apple Watch option. These accomplishments highlight the company’s robust innovation, growth, and sustainability leadership.
CDT Capital Management stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The crowd. While this evolution in AI is going to change the world, market expectations for the technology have become unhinged. The crowd, which is more like an exuberant mob, anointed the Mag 7 with spectacular, nonsensical valuations based on the premise that AI will be an amazing, money-printing growth engine for these companies – and the truth is it likely will be. The problem is that the math just isn’t mathing.
Let me explain what I mean by picking on the world’s most valuable stock, Apple Inc. (NASDAQ:AAPL). For background, Apple does not have a robust homegrown AI platform, nor does it have a plan to meaningfully monetize AI from Apple users. Right now, from our perspective, Apple’s, Apple Intelligence strategy of implementing third-party AI tools to stay competitive will likely be more of a cost of doing business than an avenue for sales and yet in 2024, the stock soared +33% based on the AI dream as exemplified by the quote below.
“A golden era of growth for Cupertino is now on the horizon into 2025.”..” (Click here to read the full text)
Overall, AAPL ranks 2nd on our list of best cash app stocks to buy according to hedge funds. While we acknowledge the potential for AAPL to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
