This article is part of Wellesley Hills Financial’s Market Movements series, found in our weekly newsletter.
Square released earnings last Thursday, beating analyst projections by 250% on the back of better than anticipated performance from the Cash App. The custodial assets of the Cash App swelled in Q1 as stimulus checks found their way into the system, with inflows increasing 55% between February and March of this year. The Cash App also benefited from the continued popularity of Bitcoin. The Cash App’s Bitcoin Segment, which allows users to purchase the crypto currency over their platform, increased by 1,100% year-over-year to $3.5 billion. Unfortunately, in this case the tremendous revenue growth is a false flag, as only 2% ($75 million) of the Bitcoin driven topline made its way to gross profits.
Square’s Shareholder Letter also offered a glimpse into the Company’s plan to merge its Cash App and Merchant Service business lines by integrating its Merchant Loyalty Program into the Cash App, allowing users to manage rewards within their mobile wallet. The consolidation of these two payment ecosystems will enhance Square’s ability to drive engagement and retention for both buyers and sellers.
Square stock price closed at $233.35 on Friday afternoon, up 4.2% on the session.