Jack Dorsey’s fintech offering, the payments giant, Square, has recently netted a 97 for its IBD SmartSelect Composite rating, rising from 94. This ushers the company into an ultra-elite list of stocks that contain a 95-plus composite rating. This new rating demonstrates that Square is above 97% of all other stocks as measured by key performance metrics and technical strength. With this composite rating, Square’s stock is placed far beyond its finance and card processing competitors in the space, a remarkable feat for a fintech. What has enabled Square to outpace its competitors with such ferocity?
Firstly, in a $100 trillion plus market, Square has long been regarded as a disruptive force and major innovator in the sector. Since its founding in 2009, Jack Dorsey has seen the company reach billion-dollar status within only 2 years as a first in its space, known for the signature square card reader that can be integrated with smart phones, or tablets. Despite other companies popping up in the space, and the financial controversy that’s seen Square’s price rise and fall rapidly, it will always maintain the benefits of being a first mover with incredibly strong brand equity. With these important titles, any international expansion or product pivot by Square receives positive adoption enabling it to be well placed to capture and meet the needs of small to medium sized businesses as their payment requirements shift.
Secondly, as an early innovator in the payments space, Square has been abreast and well-resourced to tackle the many rapid changes met by merchants and consumers alike. As such, it is able to innovate to meet the changing demands of its customers, having the resources to quickly build out, test and bring to market new and improved services that reflect the requirements of the world that ecommerce and retail operators live in. Since launching its simple card reader, Square has expanded its products and services to include stock trading functions; financial services ranging from lending, to insurance, to savings products; to crypto and defi related services; to even music with the recent $297m acquisition of Jay-Z’s music streaming platform Tidal.
Today, more than 1 million people and businesses use Square to process credit cards in the US. With increasing percentages of mobile penetration in the US, Square is more able to expand their business than any new entrants into the space. Square has been clever at maintaining and growing customers through anticipating high levels of smartphone adoption, increasing levels of convenience being a trend, offering more discount and promotional incentives to consumers and increasing the number of online retailers. As Square continually gives its market what it needs, investors increasingly lap up the company, enabling its strong confidence index on the stock market.
No doubt as the fintech world continues to grow, Square will stay abreast of this as one of the leaders of its innovations. Despite this, a 97 composite rating seems very high. It will be a hard road for Square to maintain this rating as it pushes for further success in a highly competitive and saturated market.