Block 🧈💲 (SQ) - Stock discussion

With no more noncore assets to sell they needed to raise funds to fund day to day.

This was predictable:

$1 billion on the back of good earnings and guidance for 2020.

Cash App is available in the UK and you can send money between the US and the UK.

“Now you can send and receive payments between the US and UK. They’re free, instant, and converted automatically.”

No need to link your address book. A phone number and a custom £cashtag is all that’s technically required to start.

If you use TransferWise to move cash between friends - this could be a great cheap/free alternative.

This is not a promotion. I don’t hold any shares in Square.

In the app’s Advanced section you can change the icon to a pound £ sign.

Very impressive app and very simple.

Expecting new features soon to match those of the US app.

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How can we check, say, a Cash App transfer of £100 to US $ VS a bank transfer, or a PayPal transfer?

Maybe have someone with a Cash App in the US gift you a dollar using your £cashtag?

Reckon they’re growing in the US so fast it’s thanks to the network effect(s). The networks and the networks of networks are super important concepts that modern day companies have to utilise to grow.

In Finance, it’s the Bloomberg Terminal. If you’re not on the IB Messenger, you’re missing out.

If people you know use Cash App (remember FB, Insta, WhatsApp growth?), you’d be more likely to start using it.

Revolut is doing something similar by trying to get into your contacts list.

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Anyone with a finance background know if this will disrupt the likes Visa, MasterCard, PayPal etc.? Or will it work alongside them?

I hold the 3 above but may look to add Square as a hedge if it may take some market share.

May hit PayPal before it hits the others.

Visa & Mastercard are too powerful to let it happen.

One will buy before losing market share.

Just done a wee bit of research on my lunch and The Cash App card is actually supplied by Visa.

So rather than being a disrupter it looks like it will be working in conjunction.

Also it was the most downloaded finance app in America for the past year ahead of Venmo, millennials may look at this as the norm for payment transfers going forward.

So rather than it being a competitor to the big two, it’s real competitor is PayPal. With the cash app being downloaded 60 million times vs Venmo at 53 million.

I’ll be happy to hold both going forward as there’s room for the two imo.

CashApp vs TransferWise’s business model.

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In some distant future: maybe an open source sustainable/fast/secure blockchain flavour that many companies start gradually adopting as one standard because they’re tired of the fees. Visa and Mastercard won’t be able to respond well as it’d effectively be cannibalising their own business and make the backbone infrastructure obsolete.

Visa and MasterCard

What the two giants offer is like a private centralised internet with their global data centres charging people for transactions:

Quartz - “Bitcoin has fizzled, but digital transactions are thriving on pre-internet networks”:

So what else could possibly go wrong for card companies? Plenty, it turns out. The fast-growing Chinese payment giants Alipay and WeChat—which don’t rely on card network rails—are widely feared by western financial companies. Blockchain, lawsuits, and computer server meltdowns are among the other hurdles facing the incumbent payment systems. PayPal is expanding rapidly, native to the internet, and has ways to process transactions internally without using the card networks. 10X’s Jenkins thinks crypto and distributed ledger technology can one day challenge the card networks.

“What a lot of people don’t understand is that Visa and Mastercard in particular, they essentially just operate data centers,” said Morgan Stanley’s Faucette. “Their cost base can just continue to get more efficient.”

Visa has four data centers around the world that are connected together with a massive private telecommunications system. The network of cables could circle the Earth some 400 times. Like Amazon Web Services, every new user makes the company’s cost base smaller while feeding into profits. And the sheer number of users, in the form of billions of cards and millions of merchants, means the card companies can underprice just about any challenger.

PayPal is sitting on its own network effects, but many of its transactions also run on card companies’ rails. Even a recent Visa outage in Europe seemingly had little impact on the companies’ prospects. “It made headlines because the networks are very reliable,” Faucette said. “If there is an occasional outage, consumers will tolerate that.”

Square has blockchain ambitions

Let’s also not forget that Square’s Cash App already offers stock trading and cryptocurrency trading in the US.

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We need a time machine to go back and invest. :flying_saucer:

Still time, square only increased with 6% in the last year. Still a good time to get in I argue.

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It’s down 7% today. You can always jump on the bandwagon when it’s going up after this correction. Now is a good time to wash hands, not touch faces, not travel and instead do fundamental research.

Square’s marketing is something:

Their ability to engage with users on different social mediums and scale the CashApp business (engineering, networks) so well across one-two major markets is amazing.



Still waiting for the “right” time to buy the shares. They were down 4% today to $72.

Square Cash App’s impressive history - ARK Invest’s research

(Source -

Money moving b/w borders - Cash App vs TransferWise

How is CashApp able to do “flat” FX on GBP/USD without charging like TransferWise? Some explanation from a thread on social media:

“They are subsidizing all attached fees just like Transferwise does in some markets. But, subsidizing both nostro/vostro liquidity cost and fx simultaneously on a balanced single corridor operating with two base currencies is very different of what Transferwise accomplished.”

“To elaborate on this one should understand how TW is very different from other remittance companies. 1) Their model is based on something we call “netting” which basically offsets the supply with demand between 2 countries so that money doesn’t move cross-border.”

“2) Netting can only be done efficiently in “balanced corridors” which constitutes 25% of all TW tx volume. The rest is done with traditional pre-funding which means you park money on recipient countries and wait for remittances to trigger to avoid SWIFT.”

“However, this is very cash-intensive if you’re operating in multiple markets, hence TWs 850+ MM investment rounds. Also, this exposes you to several risks, especially if a) you’re operating in countries with volatile currencies (fx risk) b) if the SWIFT rails are too long.”

“with SWIFT rails we mean how many hops a prefunding tx must jump through correspondent banks. The more hops, the longer it takes the clear the funds, the more you’re exposed to fx risk, e.g. what if TRY loses 20% of its value within 3 days until your scheduled prefunding clears.”

“There are like 15-20 moving parts like this in any given x-border transaction which make it one of the hardest problems to solve. So, although cash-app’s 0-fee instant tx betw. US-UK between its own wallets is something it’s not as big of an accomplishment as you believe.”

“TW operates in markets with “exotic currencies” like Indonesia, Malesia, even Turkey almost flawlessly with positive unit economics despite impossibly low fees and still remaining profitable overall. Now, that’s some accomplishment.”

[TW] “They had to move away because netting only works between 2 countries with balanced remittance demand towards each other. If the remittance volume is 90% one-directional from Country A to B netting won’t work. You have to prefund Country B. They are still heavily netting within EU”

“TW has since expanded to all continents with different remittance dynamics. Volume is the biggest factor due to liquidity, but currency risk is just as big since it needs to be hedged. At this point, TW is much bigger than a remittance company due to their use of hedging tools.”

“For that purpose they have a €6B fx agreement with Barclays to supply all non-balanced corridors with “cheap” non-base (=/= USD, EUR, GBP, JPY, CNY) currencies where buying local currency via local banks introduces huge (2-8%) markups.”

(See this thread:

I’ve already churned and burned them once. Bought in at £47 and sold at £62.

If they are around that mark again I’d buy back in.

Unlike RH, TW, FT, Monzo, N26, or Revolut:

  • Square is a public company.
  • They have at least 2x-2.5x as many customers using their app as each of the rest.
  • They are/will be competing for the same customers sooner or later.

That’s what makes $SQ so fascinating. iZettle and all these card payments systems were their “initial” competition. But they went vertical/side-ways and into other territories to diversify and not get stuck in one lesser growing category. Technically, they are after the same customer segment as Goldman Sachs’ Marcus and JPMorgan Chase UK. No wonder, RH started its cash/debit card product (though they are associated with stock and cryptocurrency trading #marketing).

“Software is eating the world.” - Marc Andreessen.

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It’s highly recommended to listen to earnings calls (for UK-listed share - just go to Investor(s)/Investor Relations (IR) and check for any announcements and/or subscribe to official PR/IR news).

For US-listed well-known stocks, some sites like AlphaStreet, Motley Fool and SeekingAlpha offer transcripts of those earnings calls.

Square’s earnings call was in late February after volatility has begun all over the markets. Nevertheless, Square offered earnings guidance for 2020 showing they expect large growth in 2020. They said they already launched the payments terminal (card reader) business in the UK. Australia and Canada during 2019.

Guidance for 2020

Turning to our financial guidance for 2020. We expect to achieve total net revenue of $5.90 billion to $5.96 billion and gross profit of $2.44 billion to $2.475 billion or 34% year-over-year gross profit growth at the high end of the range, excluding Caviar. These figures are ahead of the preliminary expectations we shared on our third quarter call as the business has continued to execute at high-growth rates even as we’ve scaled.

We expect our 2020 transaction profit margins as a percentage of GPV to be relatively stable compared to 1.08% in 2019 as we expect any benefit from the pricing change to be largely offset by mix shift to larger sellers. We expect to generate adjusted EBITDA between $500 million and $520 million, consistent with the preliminary guidance we provided on our last call. Similar to 2019, if we deliver top line outperformance during the year, we do not intend on increasing our adjusted EBITDA guidance and instead plan on reinvesting that upside back into the business where we see opportunities to benefit long-term profitable growth. Our EBITDA guidance includes strategic investments across both ecosystems, including the previously outlined sales and marketing spend for our Seller ecosystem, which we expect to achieve a 4-quarter payback on our overall 2020 spend and to return multiples over time based on the strong returns we see.

Additionally, as previously mentioned, 2020 guidance includes a larger-than-normal facilities expansion related to our Oakland office as well as additional regional offices, which will add an incremental onetime step-up of $50 million to our operating expense base. Over the medium to long term, we expect to continue to drive leverage from our G&A expenses as we have historically. Finally, we’re hosting our Investor Day on March 18 in San Francisco, where we will provide a deeper update on our long-term vision, market opportunity, strategy and business model for the Seller and Cash ecosystem and long-term financial outlook.

Cash App’s contribution to the top line

In the fourth quarter, Cash App delivered $183 million in revenue, excluding Bitcoin, up 96% year-over-year and $141 million in gross profit, up 101% year-over-year. Cash App’s strong and sustained growth has led to a mix shift in our overall company gross profit with cash accounting for 27% of total gross profit in the fourth quarter compared to just 19% a year ago.

Cash App’s DAU, MAU and user monetisation

As Jack mentioned, Cash App was at 24 million monthly actives in December, up 60% year-over-year and has added more new monthly actives each year since launch with December 2019 being its strongest month for new adds. Cash App daily active customers increased at an even faster clip of 80% year-over-year as we’ve enhanced discoverability and navigation to our products as well as added new products like equity investing. Cash App has not only been growing its engaged customer base to an impressive scale, but it has also driven consistent growth in revenue per customer over the past few years. In December, Cash App generated more than $30 in annualized revenue per monthly active customer, excluding Bitcoin, which more than doubled from less than $15 in December of 2017.

Vertical integration - Seller and Buyer

And we have an incredible advantage over our peers in this industry because of the two ecosystems that we’re building: one, seller focused and also focusing on their customers but Cash App up as well. Pairing both of them together is quite powerful.


Guidance updated after the $1 billion convertible bond was issued to fund operations - affecting interest expenses and thus net income:

The revisions to Square’s first quarter and full year 2020 guidance, which was previously announced on February 26, 2020, are only a result of the Notes issued by Square on March 5, 2020. As a result of the issuance of the Notes, Square is revising its guidance for net income (loss) per share and Adjusted Net Income Per Share (Adjusted EPS) to reflect the estimated increase in interest expense. Square is also revising its guidance for net income (loss) per share to reflect the estimated amortization of debt discount and issuance costs associated with the issuance.

As a reminder, Square will release financial results for the first quarter of 2020 on May 6, 2020, after market close.

The tech that helps power Cash App’s debit card? Other fintechs, including Plaid which also works with Robinhood


Headquarters: Oakland, California

Debit card transaction processor gives companies that issue cards to workers or customers more control over which transactions are approved. Grocery delivery service Instacart uses Marqeta to control which items its order-fillers can buy, reducing fraud. Square uses Marqeta for its fast-growing Cash App, which lets consumers make retail purchases, transfer money and buy stocks.

Funding: $378 million from Visa, 83 North (formerly Greylock Israel), Coatue Management and others; latest valuation of $1.9 billion

Bona fides: Has doubled revenue every year since 2016, reaching more than $300 million in 2019, Forbes estimates.

Cofounder & CEO: Jason Gardner, 50, who founded a rent payments company in 2004 that was acquired by MoneyGram for $28 million.


Headquarters: San Francisco

Making its fifth—and assuming its pending acquisition by Visa goes through, last—appearance on this list, Plaid connects payment apps like Square Cash and personal finance apps like Acorns to users’ bank accounts to transfer and track funds. Doubled number of customers in 2019 to 2,600, while expanding to the U.K., Spain, France and Ireland.

Funding: $310 million from Andreessen Horowitz, Kleiner Perkins, NEA and others; latest valuation: In January, Visa agreed to buy Plaid for $5.3 billion, double its value a year prior.

Bona fides: Works with most of the largest fintech apps in the U.S., including Venmo, Robinhood and Coinbase.

Cofounders: CEO Zach Perret, 32, and former CTO William Hockey, 30. They met as fledgling Bain consultants before founding Plaid in 2012.

Square’s physical payment terminals are taking “take a hit”.

Shares are 1/2 of the levels not that long ago.

Square is now a limited Bank which can lend money. Big milestone.