- November 6, 2020
- Posted by: virtualxstore
- Category: trading
After a decent decline towards the end of October, Square had been on the downtrend until a trading range channel evolved during the last days of October and first week of November. We see a slight Double bottom with a breakout up( purple squares). This led to a slight throwback but confirmed the breakout around market close on November 3rd. there are multiple gaps that confirm the breakout and the uptrend. The first ellipse is seen, which is the breakaway gap occurring at the beginning of the trend. Following throughout the day as earnings were to be announced post-market, there was a runaway gap(second ellipse) which strengthened the trend when approaching close and earnings news. Post market is settled at around 4.66% in the green for SQ at a price of $183. 40 USD.
Once earnings were announced, Square exceeded estimates and grew their cash app gross profit increased 212% YoY, as well as gross profit of $794 million which is 59% increase YoY. After a net loss of $11 million last quarter, this quarter was more profitable with a positive net income of $37 million. Outside US market users grew by 46% year over year. With the big increase in Cash App Gross Profit we can see that it is becoming Square’s cash cow when dealing with income earned from their operations.
My investment strategy pertaining to SQ is a long play, as payment processing solutions are expected to grow 62% from 2020 to 2025. This increase can be caused by more eCommerce business as well as more cashless banking, whether it be deposits, loans, both personal and for small businesses!
Let me know your thoughts! I’ll be happy to hear your opinions on my analysis.