Why Square Stock has risen today
Actions of Square (NYSE: SQ), the diverse fintech company, were going up on Wednesday – apparently aided by the market debut of Toast (NYSE: TOST), a restaurant payments specialist who was booming on the day of its IPO, reporting a healthy appetite for digital payment stocks. Square also launched a new feature for its Cash app on Wednesday.
As of 3:17 p.m. EDT, Square stock was up 3.7%, while Toast had climbed 54% from its IPO price of $ 40.
Square is a major competitor to Toast, and although Square has grown into more than a small business payments processor – having branched out into peer-to-peer payments, cryptocurrency, and small business lending – managing payments for small businesses such as restaurants remains one of its essential components.
Toast’s market cap jumped to $ 20 billion on Wednesday, indicating that investors see an important lead ahead for his business. The company provides restaurants with cloud-based software that handles everything from payments to front-to-back-home communication and other catering operations. In its last four quarters, Toast processed $ 38 billion in gross payment volume and reached $ 1.2 billion in revenue in the last four quarters.
Separately, Square said it has launched Cash App Pay, which allows merchants to accept Cash App payments with a QR code. Swiss credit also said the company was beta testing a new ‘buy now, pay later’ (BNPL) service, following its $ 29 billion acquisition of After payment weeks ago.
Interest in Toast along with Square’s shift to BNPL and merchant payments via Cash App shows that there is plenty of room for growth in the digital payments space. Toast has valued global restaurant business at $ 2.6 trillion, and that’s just one part of the market Square is aggressively targeting. As fintech companies disrupt the traditional banking industry further, Square – and its share price – still has plenty of room to grow.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.