Why Square Could Easily Hit $100
Square's (NYSE: SQ) stock has fallen by more than 20% in the past month, and there may be no better time to buy shares than right now.
The stock has been declining during the whole month of August as news broke that the company plans to sell its food delivery service Caviar and that management was lowering guidance for Q3. These events did not sit well with investors. However, it may an extreme reaction, given that the company actually beat earnings and revenue expectations for Q2, and that it sold Caviar for a handsome profit ($410 million compared to the $44.3 million it paid for Caviar five years ago). Square has instead decided to focus on its core business, which is never a bad idea, especially considering how lucrative it could become.
What makes Square attractive for investors is the simplicity of its business. Allowing merchants, vendors, and anyone selling anything the ability to take credit card payments by using a small device is an easy sell to potential consumers. Credit card terminals can cost hundreds of dollars a month or more, depending on the model. That's in addition to a monthly processing fee required to keep it up and running, plus interchange fees that are added on top of that for every transaction. It's easy to see how expenses quickly rack up for even small business owners, let alone ones with larger operations that require several terminals.
Source Fool.com
