It was all joys for Jack Dorsey’s Bitcoin-integrated financial services company Square as they received two stunning news – First being it took over Twitter (Jack’s other company) in market cap $30 billion to $25 billion and Second being that the company delivered stellar quarterly results beating street estimates. One thing worth noticing here was cryptocurrency business did have its share of contribution in both the news.
Cryptocurrency business contributes USD 43 million (near 10% of this quarter) to revenues
San Francisco-based Square, which is well-known in the payments sector for its credit card processor, payment hardware and popular Cash app ,reported quarterly earnings and revenue that beat analysts’ expectations on Wednesday but came up slightly short on forward guidance.
According to CNBC, Squares results outperformed both on the top line and the bottom line. Here is the performance compared to the street expectation
- Earnings: 13 cents per share vs. 11 cents per share forecast by Refinitiv.
- Revenue: $431 million vs. $413.9 million forecast by Refinitiv.
One highlight of the commentary was the bullish outlook of the Cash app that houses the cryptocurrency business of the company. While the company didn’t give specific metrics on the app’s growth, Dorsey said customers in many cases are now using it as a traditional bank.
Dorsey said as part of its announcement that
“We do see people use the Cash App fundamentally as you would expect them to use a bank account. They store money with us, it’s accepted anywhere Visa is accepted. They can send and receive money from friends and family.”
Square launched Bitcoin trading through its popular Cash App in January. This business has generated $43 million (10% of this quarter’s revenue) in revenue from the cryptocurrency in the third quarter.
Square did meet expectations for Wall Street’s fourth-quarter revenue guidance, but came up short on earnings guidance for the upcoming quarter. It expects to earn between 12 and 13 cents, below Wall Street’s expectations of 15 cents for the fourth quarter. Because of this weak outlook announcement, shares of the fintech company fell more than 3.5 percent in after-hours trading Wednesday- a minor correction compared to the stocks stellar run of more than 120 percent year over a year and 136 percent this year alone.
This stellar run in stock prices had helped Square, more than doubled its value since it allowed users to buy and sell Bitcoin. According to data from Yahoo Finance, the company’s share price in November 2017, days before the bold move, was around $37. Today shares of Square trade at $75,01, while the company sits at a market capitalization upwards of $30 billion.
This run has also interestingly helped Square outperform Dorsey’s other company — social media platform Twitter. The difference in the performance of both companies is particularly interesting because they took exact opposite directions on the matter of cryptocurrencies.
The same, was put forward by Joseph Young in his tweet where he said
“Jack Dorsey’s Bitcoin integrated payment company Square surpassed Twitter (Jack’s other company) in market cap $30 billion to $25 billion”
Jack Dorsey’s Bitcoin integrated payment company Square surpassed Twitter (Jack’s other company) in market cap
$30 billion to $25 billion pic.twitter.com/G9hZpfHMMQ
— Joseph Young (@iamjosephyoung) November 6, 2018
Cryptocurrency business, though yet small, could be a major contributor in quarters to come as Bitcoin adoption increases. This could make Square stronger than Twitter unless twitter too changes its stance on crypto business.
Will Square further grow stronger than Twitter or will Twitter fight back? Do let us know your views on the same
Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Nilesh Maurya has been associated for past 8 years as an Investment Banker with Omega Capital, a bespoke Investment Banking outfit having offices in Mumbai, New York, Singapore, and Dubai. He has been a regular contributor to business publications such as Business India and Market Express and has been a mentor to many start-up companies. Follow him on Twitter at @KoinKing1 or connect with me on linkedin.