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 Global Payments Inc. (NYSE:GPN) 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 payment terminal in action with customers apart of the experience.
Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 66
A top supplier of software and payment processing solutions and one of the Best Cash App Stocks, Global Payments Inc. (NYSE:GPN) specializes in helping small and medium-sized businesses. The business has operations in 30 countries, with Europe and Asia accounting for almost one-fourth of its income. In 2019, the firm and Total System Services combined in an all-stock transaction, giving shareholders of Total System Services 48% of the combined business. Issuer processing operations were added by the transaction.
In Q3 of 2024, strong operational execution and profitability were shown by Global Payments Inc. (NYSE:GPN), which achieved a 6% adjusted net revenue increase, 40 basis points of adjusted operating margin expansion, and 12% adjusted earnings per share growth YoY. Strong success in POS, software, and integrated and embedded businesses fueled the Merchant Solutions segment’s 7% adjusted net revenue growth. A noteworthy 23% increase in cloud point-of-sale sales for new SMBs and mid-market businesses suggests that there is a high level of demand in this industry.
Global Payments Inc. (NYSE:GPN)’s expanding position in the education sector is demonstrated by the double-digit adjusted net revenue growth it achieved, which was bolstered by noteworthy collaborations with institutions such as Swansea University in Wales, Brown University, and the University of British Columbia.
Global Payments Inc. (NYSE:GPN) committed to concentrating on its core businesses by conclusively agreeing to sell its AdvancedMD business for $1.125 billion as part of its plan to reduce operations. The business successfully finished five implementations in the Issuer Solutions division, including the first cloud conversion for a significant international financial institution in the Asia Pacific area. More than 65 million accounts in the segment’s pipeline support its growth prospects.
Weitz Large Cap Equity Fund stated the following regarding Global Payments Inc. (NYSE:GPN) in its Q3 2024 investor letter:
“We continued to increase the Fund’s positions in Global Payments Inc. (NYSE:GPN) and Idex Corp. during the quarter. Both stocks trade at significant discounts to our business value estimates. The companies have fundamental catalysts that could drive the stocks, but the timetable may have slipped a bit. The challenge is that investors want results now, especially in a bull market. We have specific milestones to track, and we think their achievement can be measured in quarters rather than years. In our view, the potential payoffs are well worth the wait.”
Overall, GPN ranks 7th on our list of best cash app stocks to buy according to hedge funds. While we acknowledge the potential for GPN 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 timeframe. If you are looking for an AI stock that is more promising than GPN 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.
