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Square Inc Class A SQ

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Morningstar’s Analysis

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Square Sees Explosive Growth in Second Quarter, Will Acquire Afterpay

Brett Horn, CFA Senior Equity Analyst

Analyst Note

| Brett Horn, CFA |

Narrow-moat Square reported explosive growth in the second quarter. While this is partially due to lapping the onset of the pandemic, underlying growth is impressive. Concurrent with earnings, the company announced that it will acquire Afterpay, an Australian buy-now, pay-later platform, in a deal valued at $29 billion. After reassessing our assumptions in light of recent performance and this deal, we expect to raise our fair value estimate by about 20%.

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Company Profile

Business Description

Founded in 2009, Square provides payment acquiring services to merchants, along with related services. The company also launched Cash App, a person-to-person payment network. Square has operations in Canada, Japan, Australia, and the United Kingdom; about 5% of revenue is generated outside the U.S.

1455 Market Street, Suite 600
San Francisco, CA, 94103
T +1 415 375-3176
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 5,477