#Crisis Core came out on my birthday back in 2008 and it was SUCH a big game for me

[lots-o-doodles]

Zack Fair coming all the way back from 2008 to haunt me

[violethowler]

A Farewell To The Clone Wars

Yesterday was the end of an era

After 11 years and 104 days

After a theatrical movie, a novel, a comic miniseries, 8 incomplete story reels, and 133 episodes

After 49 hours and 12 minutes of incredible, heartbreaking, beautifully animated television….

Ended, The Clone Wars have.

I watched all of the existing Star Wars movies on DVD when I was a kid, but I was never particularly enamored with them the way that others are. And then in August 2008, I went to the local movie theater with my grandmother to see an animated movie that – while I didn’t know it at the time – would chart the course of my future for years to come.

While a lot of the general Star Wars fandom looks down on the theatrical Clone Wars movie as weak and lackluster, 11-year-old me loved every minute of it. I’ve been obsessed with animation my entire life, and around 2 years before the theatrical release of Star Wars: The Clone Wars, I had just begun to explore the world of animation outside of my childhood Disney bubble, diving headfirst into SpongeBob and Avatar and Codename Kids Next Door. Whenever I saw commercials for an animated movie playing in theaters I would beg my family to take me to see it. It didn’t matter what the movie was actually about, all that mattered was that it was animated and I thought it looked fun.

So, when I saw Star Wars: The Clone Wars in theaters with my sister and my grandmother, I loved it. I enjoyed the movie so much that when I learned there was going to be a TV show following the movie, I was ecstatic. From the moment that the first episodes of Season 1 aired on Cartoon Network a few months later, I was hooked. From the very beginning I refused to miss a single episode. From middle school all the way through high school The Clone Wars became the axis around which almost all of my entertainment consumption revolved.

I started reading more Star Wars books and comics from all over the timeline. The Thrawn trilogy. Darth Bane. Fate of the Jedi. The Old Republic. Lost Tribe of the Sith. I devoured every piece of Star Wars media I could find as this show awakened in me an appetite for all things Star Wars. Whenever my parents asked for gift ideas for my birthday or Christmas, at the top of my list would be the latest season of The Clone Wars on DVD. Every summer I trawled the internet looking for news from Star Wars Celebration or San Diego Comic Con about the next season – trailers, clips, plot details, whatever I could find.

When the show was initially cancelled following the purchase of Lucasfilm by Disney, I was devastated. This show had such a staple of my life that the idea that it wasn’t going to be coming back hurt. As I started looking around at online Star Wars fandom to find someone, anyone, who felt the same way that I did, I discovered #SaveTheCloneWars, and joined the campaign. Through that first year after the plug was pulled, I wrote to Disney asking them to continue the show. I signed fan petitions and made posts on Facebook. It was my first real engagement with the wider online fandom.

Then came The Lost Missions and the Clone Wars Legacy releases – Crystal Crisis, Son of Dathomir, Dark Disciple… Having more Clone Wars stories helped soften the pain of the show’s loss, but the story still felt incomplete. Hearing about future arcs that had been planned for the show only added to the sense of incompleteness, knowing that there were more stories we didn’t get to see. When rumors had begun circulating about an animated Star Wars show set post-Clone Wars, resolving unanswered questions of The Clone Wars was at the top of my wish list for a future Star Wars show.

When Rebels was announced I was cautiously optimistic. I didn’t want to get attached to a new set of characters when the loss of Ahsoka and Rex and my other Clone Wars favorites still felt so raw. After Dave Filoni and the production crew of Rebels posted videos introducing the crew of the Ghost and the core cast of Rebels I reluctantly became more interested, I still was cautious about investing my time in this new show out of fear that it too would be ripped away from me without a proper conclusion just like The Clone Wars was.

So, when the final episode of Rebels’ first season confirmed that the mysterious Fulcrum was none other than Ahsoka Tano I was out of my seat cheering. There were still questions I needed answered about what happened to her after she left the Jedi Order, but the fact that she was there, back on my TV screen once more, was a relief. And when I watched the first trailer for Season 2 a month later, the words “My name is Rex,” made me scream and cry. I was overcome with tears of joy knowing that not only would my favorite Jedi be appearing in Rebels but my favorite Clone Trooper as well.

By the time Rebels’ first season had ended, I was getting ready to graduate from high school and planning where I would go to college in the fall. Taking art electives in high school, particularly a computer art class during the airing of Season 5, made me appreciate just how beautiful the show’s art style was, and when the time came for me to plan where I wanted to go to college, I chose schools that had programs for animation. I had originally wanted to be a game designer because of Kingdom Hearts, but The Clone Wars made me realize that the passion I truly wanted to make a career out of was animation.

I continued to follow Rebels as I went off to college, and by the end of Season 3 – with Maul dead for good, Ahsoka MIA, and Rex and Hondo as the only major Clone Wars characters left on the show – I had gotten attached to the Rebels characters as well. I was just as invested in their fates as I was for those of Clone Wars characters like Rex and Hondo. Season 4 finished airing at the end of my junior year, and the knowledge in the final five episodes that Ahsoka had not only survived her confrontation with Anakin at the end of Season 2 but that she was still alive years after the events of the original trilogy had me crying tears of joy as I went to sleep.

The trailer announcing the return of The Clone Wars had me in tears for hours. Long had I been dreaming of the remaining stories of this show being released in some form. I would have been content with more novels and comics like Son of Dathomir and Dark Disciple, but to have the show return in animated form was a miracle I had given up hope for years ago.

But within the last twelve months, my interest in Star Wars cooled.

I was never the biggest fan of the movies. Revenge of the Sith was my favorite because in the absence of a proper conclusion it functioned as a de facto finale to The Clone Wars. I enjoyed the original trilogy, but they weren’t movies I considered my favorites. I saw The Force Awakens and The Last Jedi in theaters and cried on my first viewing of both films, but on repeat viewings the magic of them faded and I lost interest. While I could understand why other fans liked them, there was a spark that was missing from most of the movies released under Disney that prevented them from really having any staying power for me.

And then The Rise of Skywalker came out and completely shattered any expectations I had that Disney really knew what they were doing with the franchise. Where before I was willing to trust that there actually was a plan because of how precisely Rey and Ben Solo’s arc followed the path of the Heroine’s Journey across The Force Awakens and The Last Jedi, now I realize that what I initially believed to have been a carefully planned narrative arc was most likely JJ Abrams planning to set up a conventional Hero’s Journey which Rian Johnson used to try and tell a Heroine’s Journey instead. And even if there was a plan for Rey and Ben Solo that got screwed around by behind the scenes conflicts, there was clearly no plan as far as Poe and Finn and Rose were concerned.

For months after this, I started questioning and doubting my love of all the canon Star Wars media. How could I enjoy anything in the Original and Prequel trilogy eras knowing that all the hard work of dismantling Palpatine’s empire would be undone in order to rehash the same plotline with new characters and no concern given for whether the audience could follow what was happening or why these events and character decisions mattered if they hadn’t read every comic and novel and played every video game connected to this era.

Since the last trailer for the final season of The Clone Wars went up on YouTube, I vacillated between enthusiastically sticking to the shows I loved regardless of my problems with the film saga, and abandoning the franchise altogether and gifting my Clone Wars and Rebels Blu-Ray sets and associated novels to my college friend who had just gotten into Star Wars.

And then ‘The Phantom Apprentice’ Happened.

Ahsoka and Maul’s two-part duel in the throne room and the rafters of Sundari reminded me of everything I loved about The Clone Wars in the first place. The animation. The art style. The music. The attention to detail on every character and in every detail. The tragedy of what was to come. On my third re-watch of the third-to-last episode of Season 7, that was when I realized that despite my problems with the Sequel Trilogy, despite the many flaws in the writing of the Prequel movies, I could never give up on The Clone Wars, or on Rebels. These two shows have meant too much for me to ever walk away from either of them.

I have cried at least ten times in the last five days watching the final two episodes of The Clone Wars. The final of this incredible series was such a gut punch even though I knew what was coming and who would survive. I had and saw so many ideas about what the last episode would include. Would their be a montage of all the Jedi who survived Order 66 as a mirror of the death montage in Episode III? Would Ahsoka and Rex receive Obi-Wan’s recorded message from Rebels warning surviving Jedi to stay away from the temple?

But in the end, none of those things happened. The focus of the episode remained on Ahsoka and Rex. Their escape from the ship. The tragedy of their inability to save the other clones. And ending with a shot of Vader finding the ship some time later, all these symbols of the Republic buried beneath the winds of time as the empire rises. It was bleak and depressing and when the credits rolled I was holding back tears. But looking back on the entire series and the era of the war, knowing what was coming, there was no other way I could have expected it to end. The audience already knows that this is not the end, but Ahsoka and Rex don’t know that, and so the finale of The Clone Wars reflects this. The pain and despair. The tragedy and confusion over what will happen next. And I wouldn’t have it any other way.

Despite all the movies I’ve watched; the comics and novels I’ve read; the video games I’ve played; very few things in Star Wars canon or Legends have been able to match the magic of The Clone Wars in my heart. I have never truly been a Star Wars fan so much as I have been a Clone Wars and Rebels fan. The novels and comics and movies I enjoy are an extension of my love for the shows, but the shows will always come first. The characters these shows introduced have stuck with me more than any characters from the movies ever has. Clone Wars made me love Anakin and Obi-Wan and Padme and Yoda, but to me, my Star Wars favorites have always been Ahsoka, Maul, Rex, Ventress, Fives, Hera, Zeb, Thrawn, Sabine, and all the rest.

So, I just wanted to say thank you to Dave Filoni, Ashley Eckstein, Matt Lanter, Catherine Taber, James Arnold Taylor, Sam Whitwer, Nika Futterman, Dee Bradley Baker, as well as every single person involved in bringing this show to live for all the hard work and passion you have poured into this series. Your work on this show shaped the person I am today, and I look forward to seeing what you do next.

May the Force Be With You.

[smartwebhostingblog]

Square: Where Do We Go Now? - Up

New Post has been published on http://philippinesoutsourcingjobs.com/square-where-do-we-go-now-up/

Square: Where Do We Go Now? - Up

The fintech that keeps innovating

Below I will look at the current state of Square (SQ) and the potential for equity appreciation over the next 12 months. Coming from a background in banking, Square and the crop of fintechs that emerged in the wake of the 2008 crisis such as Lending Club (LC) and On Deck (ONDK) have been one of my favorite group of companies to watch. In the 2010-2015 period these companies caused some heartburn for bank managers due to their rapid growth and the potential for industry disruption by Silicone Valley. Since then, the threat of complete disruption has subsided, but some of the fintechs continue to make good progress – Square being one of them.

This article looks at Square through a fundamental business analysis and puts it in the perspective of the macroeconomic late-stage business cycle in the United States. My thesis is that Square is a fundamentally successful company with solid leadership and a proven ability to innovate. However, Square’s source of revenue is risky (very small businesses) and it may suffer a significant drop in demand whenever the next economic downturn occurs. Since economic indicators in the US suggest that a downturn is not imminent, the recent drop in Square price is a good opportunity (at least in my personal opinion) to enter the stock.

(Source: Square)

Happy 10th birthday, Square! – a look at fundamentals

Square started in February 2009 and took over the country with its unique white dongles for mobile phones which enabled anyone to accept credit card payments. It was somewhat reminiscent of the white headphones Apple introduced in the early 2000’s which made the products instantly recognizable. Aside from pure investment purposes, I like Square for a number of reasons. I have personally experienced their products on many occasions and have always had a good experience – definitely an improvement over what existed before them. I have seen small businesses and individuals exchange money for simple services, something which otherwise may not have occurred since there were no other user-friendly tools. By enabling small businesses and sole proprietors to exchange products and services, Square is undoubtedly helping expand the economic pie. This is something which should be celebrated.

However, when we are considering investing in the equity of a company we must look for indicators which will drive that value up. Positive externalities are nice but it’s not what we’re here for.

So let’s look at Square’s Q4 presentation.

(Source: Square)

The company continues to grow fast. Net revenue, Gross Payment Volume (GPV) and EBITDA are all growing impressively. While Square made two acquisitions (Weebly and Zesty) in 2018, they were not large enough to distort the results. Including the acquisitions Adjusted Revenue growth was 64%, excluding them it was 53% – Square is not relying on acquisitions alone to boost revenue. Its core business is also growing.

(Source: Square)

Looking at revenue by client cohort shows us that the clients who are signed up each year contribute progressively more revenue. Even more importantly, the revenue derived from the same cohort grows over time. This trend is significant because it demonstrates that the company continues to deliver increasing value to clients over a multiple years. Client churn does not seem to be a concern because if a lot of the clients were leaving, the revenue from the cohorts would decline over time. Clients are staying and they are paying more.

(Source: Square)

Another important source of strength is the revenue diversification. While the transaction-based revenue is still the lifeblood of the company, subscription and services-based revenues are increasing faster and can provide some counterbalance in the case of an economic downturn (more on that later). Services-based revenues include Instant Deposit, Caviar, Square Capital and Cash Card, which are all offerings that are complimentary to the core payments business.

Data by YCharts

While Square’s stock dropped about 5% in after hours trading on February 27th from $79.35 to $75.92, it bounced back to around 81$ per share the next day. In my opinion the drop following the earnings announcement was a knee jerk reaction to revenue growth that was slightly less than what the consensus expected. We have to keep min mind, however, that Square is still a growing company that is investing in many new products and most metrics will bounce around.

The forward P/E ratio has stabilized at the lower end of the range from the last year at around 110. Yes, this is a high P/E ratio which implies a forward EPS of around $0.7, but Square is a growth company and if it is successful at rolling out its ambitious new products to its existing and future customers, I think the valuation is justified.

If Square surprises on revenue growth in the coming quarters, it is plausible that the forward P/E ratio can return to higher levels. In fact, for the stock to grow to $100, the forward P/E ratio will have to stand at around 150, which is well below its previous highs. Therefore, I believe a range of $95-100 is reasonable for Square provided no unforeseen circumstances.

Product innovation done right

(Source: Square)

Square has come a long way since its early days. The company now provides a large suite of products to small businesses including, payment acceptance, processing, debit cards, employee benefits and an In-App Payments SDK for online businesses. The increase in new products and services sets Square apart from other fintechs who were born around the same time. Many have stagnated because their original product has not seen wide adoption and others have struggled to pivot to new products.

(Source: Square)

Products launched in the last five years contributed 51% of Adjusted Revenues, a significant indicator of Square’s ability to continuously innovate.

Square also released one of the most popular apps in 2018 – Cash App. The Cash App may actually be Square’s secret weapon because it leverages on the lessons CEO Jack Dorsey has learned form his other company – Twitter.

While not a significant driver of revenues yet, Cash App was able to tap into major network effects and rocketed to the #17 place for free apps in the Apple App Store.

People are utilizing the money they have in Cash App with friends, families and landlords, causing another download, and another, into the network – Jack Dorsey

(Source: Square)

I am very excited for Cash App because launching a successful payments app is incredibly difficult. Just ask Zelle or Google Wallet. If Square is able to grow Cash App it has the potential to take marketshare from Venmo, which has stagnated in terms of new features. And this is where Bitcoin comes in. Cash App allows users to buy Bitcoin, although that is not its main use. I don’t believe Bitcoin plays a major role in Square’s pans for growth, but including this feature makes the app different and cool enough to take users away from Venmo. The results speak for themselves – the app had over 15M active monthly users as of December.

Competition not a threat

Speaking of Venmo and PayPal, Square doesn’t seem to have much new competition. I am not aware of new fintech entrants who are trying to go head to head with Square. Affirm may eventually be a challenger but for now the two companies seem to be going after the opposite sides of the register – Square goes for the business owners, Affirm goes for shoppers.

With regard to existing competitors, Square has successfully maneuvered them over the last ten years. There is little reason to believe things will change dramatically over the next twelve months.

If you’ve read everything above, you probably think that I am all in on Square. I would be except for one fairly significant concern which isn’t a problem with Square specifically – it’s the business cycle.

Trouble on the economic horizon – a race against time

One thing that Square has in common with other fintechs that came after 2009 is the they never lived through an economic downturn. While a couple other lending fintechs imploded even without the help of a recession, this is a valid concern for investors. Not only is the management team potentially untested in this area, but the main client base of Square is made up of very small businesses.

Typically in a recession, small businesses do worst. Unfortunately square doesn’t have a lot of ways to escape this predicament, although it is trying to diversify as fast as possible.

(Source: Square)

As of Q4 2018, more than 50% of Square’s sellers generate GPV of more than $125,000. A business that does $125,000 in sales isn’t tiny but it definitely isn’t large. Even the largest category of sellers that Square breaks out (those over $500,000 in GPV) aren’t exactly large businesses and can fail in a recession. Square’s efforts to break into larger and more diverse businesses are absolutely necessary and need to be done ASAP before we reach the next downturn. Servicing larger businesses will ensure that the lifeblood of Square, the GPV, doesn’t drop too much in a recession.

The good news is that most economists and market observers do not foresee a recession in the next 2-4 quarters. Some have said that indicators are flashing signals of a late stage cycle, but there are no obvious reasons that things will change dramatically overnight.

The St. Louis Fed published an article which examines four housing indicators which are typically canaries in the coal-mine for recessions. They concluded that:

“Recent movements in several housing indicators resemble those seen in the late stages of past economic expansions.”

“Not all housing indicators point to a slowdown.”

“Key indicators to watch include mortgage rates, existing home sales, real house prices and the momentum of residential investment.”

The analysis of the indicators is a mixed bag, but not an immediate alarm.

To conclude – Square is a unique opportunity within a limited time window

For these reasons, it is my opinion that owning Square equity for the next 12 months offers a unique opportunity to benefit from the story of this company. Square has shown that it can endure challenges from incumbents and other startups. It is one of the few fintechs that is introducing products on a consistent and successful basis.

The hidden weapon of Square is the Cash App which has a realistic chance of gaining significant marketshare and challenging Venmo as the preferred payments app in the US.

The Achilles heel of the company may be a recession which hits its core demographic hard, but such an event is unlikely in the next 12 months.

Lastly, this is not one of the safest investments as it should be obvious with any early stage tech company. I present it simply as an idea which I believe exists for a limited time based on factors which I believe are indicative of future success for the company.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a financial adviser. All articles are my opinion and are meant for educational purposes. Perform your own due diligence and consult a financial professional before trading.

[awesomecolorfulcollectorwombat]

Square: Where Do We Go Now? - Up

New Post has been published on http://philippinesoutsourcingjobs.com/square-where-do-we-go-now-up/

Square: Where Do We Go Now? - Up

The fintech that keeps innovating

Below I will look at the current state of Square (SQ) and the potential for equity appreciation over the next 12 months. Coming from a background in banking, Square and the crop of fintechs that emerged in the wake of the 2008 crisis such as Lending Club (LC) and On Deck (ONDK) have been one of my favorite group of companies to watch. In the 2010-2015 period these companies caused some heartburn for bank managers due to their rapid growth and the potential for industry disruption by Silicone Valley. Since then, the threat of complete disruption has subsided, but some of the fintechs continue to make good progress – Square being one of them.

This article looks at Square through a fundamental business analysis and puts it in the perspective of the macroeconomic late-stage business cycle in the United States. My thesis is that Square is a fundamentally successful company with solid leadership and a proven ability to innovate. However, Square’s source of revenue is risky (very small businesses) and it may suffer a significant drop in demand whenever the next economic downturn occurs. Since economic indicators in the US suggest that a downturn is not imminent, the recent drop in Square price is a good opportunity (at least in my personal opinion) to enter the stock.

(Source: Square)

Happy 10th birthday, Square! – a look at fundamentals

Square started in February 2009 and took over the country with its unique white dongles for mobile phones which enabled anyone to accept credit card payments. It was somewhat reminiscent of the white headphones Apple introduced in the early 2000’s which made the products instantly recognizable. Aside from pure investment purposes, I like Square for a number of reasons. I have personally experienced their products on many occasions and have always had a good experience – definitely an improvement over what existed before them. I have seen small businesses and individuals exchange money for simple services, something which otherwise may not have occurred since there were no other user-friendly tools. By enabling small businesses and sole proprietors to exchange products and services, Square is undoubtedly helping expand the economic pie. This is something which should be celebrated.

However, when we are considering investing in the equity of a company we must look for indicators which will drive that value up. Positive externalities are nice but it’s not what we’re here for.

So let’s look at Square’s Q4 presentation.

(Source: Square)

The company continues to grow fast. Net revenue, Gross Payment Volume (GPV) and EBITDA are all growing impressively. While Square made two acquisitions (Weebly and Zesty) in 2018, they were not large enough to distort the results. Including the acquisitions Adjusted Revenue growth was 64%, excluding them it was 53% – Square is not relying on acquisitions alone to boost revenue. Its core business is also growing.

(Source: Square)

Looking at revenue by client cohort shows us that the clients who are signed up each year contribute progressively more revenue. Even more importantly, the revenue derived from the same cohort grows over time. This trend is significant because it demonstrates that the company continues to deliver increasing value to clients over a multiple years. Client churn does not seem to be a concern because if a lot of the clients were leaving, the revenue from the cohorts would decline over time. Clients are staying and they are paying more.

(Source: Square)

Another important source of strength is the revenue diversification. While the transaction-based revenue is still the lifeblood of the company, subscription and services-based revenues are increasing faster and can provide some counterbalance in the case of an economic downturn (more on that later). Services-based revenues include Instant Deposit, Caviar, Square Capital and Cash Card, which are all offerings that are complimentary to the core payments business.

Data by YCharts

While Square’s stock dropped about 5% in after hours trading on February 27th from $79.35 to $75.92, it bounced back to around 81$ per share the next day. In my opinion the drop following the earnings announcement was a knee jerk reaction to revenue growth that was slightly less than what the consensus expected. We have to keep min mind, however, that Square is still a growing company that is investing in many new products and most metrics will bounce around.

The forward P/E ratio has stabilized at the lower end of the range from the last year at around 110. Yes, this is a high P/E ratio which implies a forward EPS of around $0.7, but Square is a growth company and if it is successful at rolling out its ambitious new products to its existing and future customers, I think the valuation is justified.

If Square surprises on revenue growth in the coming quarters, it is plausible that the forward P/E ratio can return to higher levels. In fact, for the stock to grow to $100, the forward P/E ratio will have to stand at around 150, which is well below its previous highs. Therefore, I believe a range of $95-100 is reasonable for Square provided no unforeseen circumstances.

Product innovation done right

(Source: Square)

Square has come a long way since its early days. The company now provides a large suite of products to small businesses including, payment acceptance, processing, debit cards, employee benefits and an In-App Payments SDK for online businesses. The increase in new products and services sets Square apart from other fintechs who were born around the same time. Many have stagnated because their original product has not seen wide adoption and others have struggled to pivot to new products.

(Source: Square)

Products launched in the last five years contributed 51% of Adjusted Revenues, a significant indicator of Square’s ability to continuously innovate.

Square also released one of the most popular apps in 2018 – Cash App. The Cash App may actually be Square’s secret weapon because it leverages on the lessons CEO Jack Dorsey has learned form his other company – Twitter.

While not a significant driver of revenues yet, Cash App was able to tap into major network effects and rocketed to the #17 place for free apps in the Apple App Store.

People are utilizing the money they have in Cash App with friends, families and landlords, causing another download, and another, into the network – Jack Dorsey

(Source: Square)

I am very excited for Cash App because launching a successful payments app is incredibly difficult. Just ask Zelle or Google Wallet. If Square is able to grow Cash App it has the potential to take marketshare from Venmo, which has stagnated in terms of new features. And this is where Bitcoin comes in. Cash App allows users to buy Bitcoin, although that is not its main use. I don’t believe Bitcoin plays a major role in Square’s pans for growth, but including this feature makes the app different and cool enough to take users away from Venmo. The results speak for themselves – the app had over 15M active monthly users as of December.

Competition not a threat

Speaking of Venmo and PayPal, Square doesn’t seem to have much new competition. I am not aware of new fintech entrants who are trying to go head to head with Square. Affirm may eventually be a challenger but for now the two companies seem to be going after the opposite sides of the register – Square goes for the business owners, Affirm goes for shoppers.

With regard to existing competitors, Square has successfully maneuvered them over the last ten years. There is little reason to believe things will change dramatically over the next twelve months.

If you’ve read everything above, you probably think that I am all in on Square. I would be except for one fairly significant concern which isn’t a problem with Square specifically – it’s the business cycle.

Trouble on the economic horizon – a race against time

One thing that Square has in common with other fintechs that came after 2009 is the they never lived through an economic downturn. While a couple other lending fintechs imploded even without the help of a recession, this is a valid concern for investors. Not only is the management team potentially untested in this area, but the main client base of Square is made up of very small businesses.

Typically in a recession, small businesses do worst. Unfortunately square doesn’t have a lot of ways to escape this predicament, although it is trying to diversify as fast as possible.

(Source: Square)

As of Q4 2018, more than 50% of Square’s sellers generate GPV of more than $125,000. A business that does $125,000 in sales isn’t tiny but it definitely isn’t large. Even the largest category of sellers that Square breaks out (those over $500,000 in GPV) aren’t exactly large businesses and can fail in a recession. Square’s efforts to break into larger and more diverse businesses are absolutely necessary and need to be done ASAP before we reach the next downturn. Servicing larger businesses will ensure that the lifeblood of Square, the GPV, doesn’t drop too much in a recession.

The good news is that most economists and market observers do not foresee a recession in the next 2-4 quarters. Some have said that indicators are flashing signals of a late stage cycle, but there are no obvious reasons that things will change dramatically overnight.

The St. Louis Fed published an article which examines four housing indicators which are typically canaries in the coal-mine for recessions. They concluded that:

“Recent movements in several housing indicators resemble those seen in the late stages of past economic expansions.”

“Not all housing indicators point to a slowdown.”

“Key indicators to watch include mortgage rates, existing home sales, real house prices and the momentum of residential investment.”

The analysis of the indicators is a mixed bag, but not an immediate alarm.

To conclude – Square is a unique opportunity within a limited time window

For these reasons, it is my opinion that owning Square equity for the next 12 months offers a unique opportunity to benefit from the story of this company. Square has shown that it can endure challenges from incumbents and other startups. It is one of the few fintechs that is introducing products on a consistent and successful basis.

The hidden weapon of Square is the Cash App which has a realistic chance of gaining significant marketshare and challenging Venmo as the preferred payments app in the US.

The Achilles heel of the company may be a recession which hits its core demographic hard, but such an event is unlikely in the next 12 months.

Lastly, this is not one of the safest investments as it should be obvious with any early stage tech company. I present it simply as an idea which I believe exists for a limited time based on factors which I believe are indicative of future success for the company.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a financial adviser. All articles are my opinion and are meant for educational purposes. Perform your own due diligence and consult a financial professional before trading.

[lazilysillyprince]

Square: Where Do We Go Now? - Up

New Post has been published on http://philippinesoutsourcingjobs.com/square-where-do-we-go-now-up/

Square: Where Do We Go Now? - Up

The fintech that keeps innovating

Below I will look at the current state of Square (SQ) and the potential for equity appreciation over the next 12 months. Coming from a background in banking, Square and the crop of fintechs that emerged in the wake of the 2008 crisis such as Lending Club (LC) and On Deck (ONDK) have been one of my favorite group of companies to watch. In the 2010-2015 period these companies caused some heartburn for bank managers due to their rapid growth and the potential for industry disruption by Silicone Valley. Since then, the threat of complete disruption has subsided, but some of the fintechs continue to make good progress – Square being one of them.

This article looks at Square through a fundamental business analysis and puts it in the perspective of the macroeconomic late-stage business cycle in the United States. My thesis is that Square is a fundamentally successful company with solid leadership and a proven ability to innovate. However, Square’s source of revenue is risky (very small businesses) and it may suffer a significant drop in demand whenever the next economic downturn occurs. Since economic indicators in the US suggest that a downturn is not imminent, the recent drop in Square price is a good opportunity (at least in my personal opinion) to enter the stock.

(Source: Square)

Happy 10th birthday, Square! – a look at fundamentals

Square started in February 2009 and took over the country with its unique white dongles for mobile phones which enabled anyone to accept credit card payments. It was somewhat reminiscent of the white headphones Apple introduced in the early 2000’s which made the products instantly recognizable. Aside from pure investment purposes, I like Square for a number of reasons. I have personally experienced their products on many occasions and have always had a good experience – definitely an improvement over what existed before them. I have seen small businesses and individuals exchange money for simple services, something which otherwise may not have occurred since there were no other user-friendly tools. By enabling small businesses and sole proprietors to exchange products and services, Square is undoubtedly helping expand the economic pie. This is something which should be celebrated.

However, when we are considering investing in the equity of a company we must look for indicators which will drive that value up. Positive externalities are nice but it’s not what we’re here for.

So let’s look at Square’s Q4 presentation.

(Source: Square)

The company continues to grow fast. Net revenue, Gross Payment Volume (GPV) and EBITDA are all growing impressively. While Square made two acquisitions (Weebly and Zesty) in 2018, they were not large enough to distort the results. Including the acquisitions Adjusted Revenue growth was 64%, excluding them it was 53% – Square is not relying on acquisitions alone to boost revenue. Its core business is also growing.

(Source: Square)

Looking at revenue by client cohort shows us that the clients who are signed up each year contribute progressively more revenue. Even more importantly, the revenue derived from the same cohort grows over time. This trend is significant because it demonstrates that the company continues to deliver increasing value to clients over a multiple years. Client churn does not seem to be a concern because if a lot of the clients were leaving, the revenue from the cohorts would decline over time. Clients are staying and they are paying more.

(Source: Square)

Another important source of strength is the revenue diversification. While the transaction-based revenue is still the lifeblood of the company, subscription and services-based revenues are increasing faster and can provide some counterbalance in the case of an economic downturn (more on that later). Services-based revenues include Instant Deposit, Caviar, Square Capital and Cash Card, which are all offerings that are complimentary to the core payments business.

Data by YCharts

While Square’s stock dropped about 5% in after hours trading on February 27th from $79.35 to $75.92, it bounced back to around 81$ per share the next day. In my opinion the drop following the earnings announcement was a knee jerk reaction to revenue growth that was slightly less than what the consensus expected. We have to keep min mind, however, that Square is still a growing company that is investing in many new products and most metrics will bounce around.

The forward P/E ratio has stabilized at the lower end of the range from the last year at around 110. Yes, this is a high P/E ratio which implies a forward EPS of around $0.7, but Square is a growth company and if it is successful at rolling out its ambitious new products to its existing and future customers, I think the valuation is justified.

If Square surprises on revenue growth in the coming quarters, it is plausible that the forward P/E ratio can return to higher levels. In fact, for the stock to grow to $100, the forward P/E ratio will have to stand at around 150, which is well below its previous highs. Therefore, I believe a range of $95-100 is reasonable for Square provided no unforeseen circumstances.

Product innovation done right

(Source: Square)

Square has come a long way since its early days. The company now provides a large suite of products to small businesses including, payment acceptance, processing, debit cards, employee benefits and an In-App Payments SDK for online businesses. The increase in new products and services sets Square apart from other fintechs who were born around the same time. Many have stagnated because their original product has not seen wide adoption and others have struggled to pivot to new products.

(Source: Square)

Products launched in the last five years contributed 51% of Adjusted Revenues, a significant indicator of Square’s ability to continuously innovate.

Square also released one of the most popular apps in 2018 – Cash App. The Cash App may actually be Square’s secret weapon because it leverages on the lessons CEO Jack Dorsey has learned form his other company – Twitter.

While not a significant driver of revenues yet, Cash App was able to tap into major network effects and rocketed to the #17 place for free apps in the Apple App Store.

People are utilizing the money they have in Cash App with friends, families and landlords, causing another download, and another, into the network – Jack Dorsey

(Source: Square)

I am very excited for Cash App because launching a successful payments app is incredibly difficult. Just ask Zelle or Google Wallet. If Square is able to grow Cash App it has the potential to take marketshare from Venmo, which has stagnated in terms of new features. And this is where Bitcoin comes in. Cash App allows users to buy Bitcoin, although that is not its main use. I don’t believe Bitcoin plays a major role in Square’s pans for growth, but including this feature makes the app different and cool enough to take users away from Venmo. The results speak for themselves – the app had over 15M active monthly users as of December.

Competition not a threat

Speaking of Venmo and PayPal, Square doesn’t seem to have much new competition. I am not aware of new fintech entrants who are trying to go head to head with Square. Affirm may eventually be a challenger but for now the two companies seem to be going after the opposite sides of the register – Square goes for the business owners, Affirm goes for shoppers.

With regard to existing competitors, Square has successfully maneuvered them over the last ten years. There is little reason to believe things will change dramatically over the next twelve months.

If you’ve read everything above, you probably think that I am all in on Square. I would be except for one fairly significant concern which isn’t a problem with Square specifically – it’s the business cycle.

Trouble on the economic horizon – a race against time

One thing that Square has in common with other fintechs that came after 2009 is the they never lived through an economic downturn. While a couple other lending fintechs imploded even without the help of a recession, this is a valid concern for investors. Not only is the management team potentially untested in this area, but the main client base of Square is made up of very small businesses.

Typically in a recession, small businesses do worst. Unfortunately square doesn’t have a lot of ways to escape this predicament, although it is trying to diversify as fast as possible.

(Source: Square)

As of Q4 2018, more than 50% of Square’s sellers generate GPV of more than $125,000. A business that does $125,000 in sales isn’t tiny but it definitely isn’t large. Even the largest category of sellers that Square breaks out (those over $500,000 in GPV) aren’t exactly large businesses and can fail in a recession. Square’s efforts to break into larger and more diverse businesses are absolutely necessary and need to be done ASAP before we reach the next downturn. Servicing larger businesses will ensure that the lifeblood of Square, the GPV, doesn’t drop too much in a recession.

The good news is that most economists and market observers do not foresee a recession in the next 2-4 quarters. Some have said that indicators are flashing signals of a late stage cycle, but there are no obvious reasons that things will change dramatically overnight.

The St. Louis Fed published an article which examines four housing indicators which are typically canaries in the coal-mine for recessions. They concluded that:

“Recent movements in several housing indicators resemble those seen in the late stages of past economic expansions.”

“Not all housing indicators point to a slowdown.”

“Key indicators to watch include mortgage rates, existing home sales, real house prices and the momentum of residential investment.”

The analysis of the indicators is a mixed bag, but not an immediate alarm.

To conclude – Square is a unique opportunity within a limited time window

For these reasons, it is my opinion that owning Square equity for the next 12 months offers a unique opportunity to benefit from the story of this company. Square has shown that it can endure challenges from incumbents and other startups. It is one of the few fintechs that is introducing products on a consistent and successful basis.

The hidden weapon of Square is the Cash App which has a realistic chance of gaining significant marketshare and challenging Venmo as the preferred payments app in the US.

The Achilles heel of the company may be a recession which hits its core demographic hard, but such an event is unlikely in the next 12 months.

Lastly, this is not one of the safest investments as it should be obvious with any early stage tech company. I present it simply as an idea which I believe exists for a limited time based on factors which I believe are indicative of future success for the company.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a financial adviser. All articles are my opinion and are meant for educational purposes. Perform your own due diligence and consult a financial professional before trading.

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Square: Where Do We Go Now? - Up

New Post has been published on http://philippinesoutsourcingjobs.com/square-where-do-we-go-now-up/

Square: Where Do We Go Now? - Up

The fintech that keeps innovating

Below I will look at the current state of Square (SQ) and the potential for equity appreciation over the next 12 months. Coming from a background in banking, Square and the crop of fintechs that emerged in the wake of the 2008 crisis such as Lending Club (LC) and On Deck (ONDK) have been one of my favorite group of companies to watch. In the 2010-2015 period these companies caused some heartburn for bank managers due to their rapid growth and the potential for industry disruption by Silicone Valley. Since then, the threat of complete disruption has subsided, but some of the fintechs continue to make good progress – Square being one of them.

This article looks at Square through a fundamental business analysis and puts it in the perspective of the macroeconomic late-stage business cycle in the United States. My thesis is that Square is a fundamentally successful company with solid leadership and a proven ability to innovate. However, Square’s source of revenue is risky (very small businesses) and it may suffer a significant drop in demand whenever the next economic downturn occurs. Since economic indicators in the US suggest that a downturn is not imminent, the recent drop in Square price is a good opportunity (at least in my personal opinion) to enter the stock.

(Source: Square)

Happy 10th birthday, Square! – a look at fundamentals

Square started in February 2009 and took over the country with its unique white dongles for mobile phones which enabled anyone to accept credit card payments. It was somewhat reminiscent of the white headphones Apple introduced in the early 2000’s which made the products instantly recognizable. Aside from pure investment purposes, I like Square for a number of reasons. I have personally experienced their products on many occasions and have always had a good experience – definitely an improvement over what existed before them. I have seen small businesses and individuals exchange money for simple services, something which otherwise may not have occurred since there were no other user-friendly tools. By enabling small businesses and sole proprietors to exchange products and services, Square is undoubtedly helping expand the economic pie. This is something which should be celebrated.

However, when we are considering investing in the equity of a company we must look for indicators which will drive that value up. Positive externalities are nice but it’s not what we’re here for.

So let’s look at Square’s Q4 presentation.

(Source: Square)

The company continues to grow fast. Net revenue, Gross Payment Volume (GPV) and EBITDA are all growing impressively. While Square made two acquisitions (Weebly and Zesty) in 2018, they were not large enough to distort the results. Including the acquisitions Adjusted Revenue growth was 64%, excluding them it was 53% – Square is not relying on acquisitions alone to boost revenue. Its core business is also growing.

(Source: Square)

Looking at revenue by client cohort shows us that the clients who are signed up each year contribute progressively more revenue. Even more importantly, the revenue derived from the same cohort grows over time. This trend is significant because it demonstrates that the company continues to deliver increasing value to clients over a multiple years. Client churn does not seem to be a concern because if a lot of the clients were leaving, the revenue from the cohorts would decline over time. Clients are staying and they are paying more.

(Source: Square)

Another important source of strength is the revenue diversification. While the transaction-based revenue is still the lifeblood of the company, subscription and services-based revenues are increasing faster and can provide some counterbalance in the case of an economic downturn (more on that later). Services-based revenues include Instant Deposit, Caviar, Square Capital and Cash Card, which are all offerings that are complimentary to the core payments business.

Data by YCharts

While Square’s stock dropped about 5% in after hours trading on February 27th from $79.35 to $75.92, it bounced back to around 81$ per share the next day. In my opinion the drop following the earnings announcement was a knee jerk reaction to revenue growth that was slightly less than what the consensus expected. We have to keep min mind, however, that Square is still a growing company that is investing in many new products and most metrics will bounce around.

The forward P/E ratio has stabilized at the lower end of the range from the last year at around 110. Yes, this is a high P/E ratio which implies a forward EPS of around $0.7, but Square is a growth company and if it is successful at rolling out its ambitious new products to its existing and future customers, I think the valuation is justified.

If Square surprises on revenue growth in the coming quarters, it is plausible that the forward P/E ratio can return to higher levels. In fact, for the stock to grow to $100, the forward P/E ratio will have to stand at around 150, which is well below its previous highs. Therefore, I believe a range of $95-100 is reasonable for Square provided no unforeseen circumstances.

Product innovation done right

(Source: Square)

Square has come a long way since its early days. The company now provides a large suite of products to small businesses including, payment acceptance, processing, debit cards, employee benefits and an In-App Payments SDK for online businesses. The increase in new products and services sets Square apart from other fintechs who were born around the same time. Many have stagnated because their original product has not seen wide adoption and others have struggled to pivot to new products.

(Source: Square)

Products launched in the last five years contributed 51% of Adjusted Revenues, a significant indicator of Square’s ability to continuously innovate.

Square also released one of the most popular apps in 2018 – Cash App. The Cash App may actually be Square’s secret weapon because it leverages on the lessons CEO Jack Dorsey has learned form his other company – Twitter.

While not a significant driver of revenues yet, Cash App was able to tap into major network effects and rocketed to the #17 place for free apps in the Apple App Store.

People are utilizing the money they have in Cash App with friends, families and landlords, causing another download, and another, into the network – Jack Dorsey

(Source: Square)

I am very excited for Cash App because launching a successful payments app is incredibly difficult. Just ask Zelle or Google Wallet. If Square is able to grow Cash App it has the potential to take marketshare from Venmo, which has stagnated in terms of new features. And this is where Bitcoin comes in. Cash App allows users to buy Bitcoin, although that is not its main use. I don’t believe Bitcoin plays a major role in Square’s pans for growth, but including this feature makes the app different and cool enough to take users away from Venmo. The results speak for themselves – the app had over 15M active monthly users as of December.

Competition not a threat

Speaking of Venmo and PayPal, Square doesn’t seem to have much new competition. I am not aware of new fintech entrants who are trying to go head to head with Square. Affirm may eventually be a challenger but for now the two companies seem to be going after the opposite sides of the register – Square goes for the business owners, Affirm goes for shoppers.

With regard to existing competitors, Square has successfully maneuvered them over the last ten years. There is little reason to believe things will change dramatically over the next twelve months.

If you’ve read everything above, you probably think that I am all in on Square. I would be except for one fairly significant concern which isn’t a problem with Square specifically – it’s the business cycle.

Trouble on the economic horizon – a race against time

One thing that Square has in common with other fintechs that came after 2009 is the they never lived through an economic downturn. While a couple other lending fintechs imploded even without the help of a recession, this is a valid concern for investors. Not only is the management team potentially untested in this area, but the main client base of Square is made up of very small businesses.

Typically in a recession, small businesses do worst. Unfortunately square doesn’t have a lot of ways to escape this predicament, although it is trying to diversify as fast as possible.

(Source: Square)

As of Q4 2018, more than 50% of Square’s sellers generate GPV of more than $125,000. A business that does $125,000 in sales isn’t tiny but it definitely isn’t large. Even the largest category of sellers that Square breaks out (those over $500,000 in GPV) aren’t exactly large businesses and can fail in a recession. Square’s efforts to break into larger and more diverse businesses are absolutely necessary and need to be done ASAP before we reach the next downturn. Servicing larger businesses will ensure that the lifeblood of Square, the GPV, doesn’t drop too much in a recession.

The good news is that most economists and market observers do not foresee a recession in the next 2-4 quarters. Some have said that indicators are flashing signals of a late stage cycle, but there are no obvious reasons that things will change dramatically overnight.

The St. Louis Fed published an article which examines four housing indicators which are typically canaries in the coal-mine for recessions. They concluded that:

“Recent movements in several housing indicators resemble those seen in the late stages of past economic expansions.”

“Not all housing indicators point to a slowdown.”

“Key indicators to watch include mortgage rates, existing home sales, real house prices and the momentum of residential investment.”

The analysis of the indicators is a mixed bag, but not an immediate alarm.

To conclude – Square is a unique opportunity within a limited time window

For these reasons, it is my opinion that owning Square equity for the next 12 months offers a unique opportunity to benefit from the story of this company. Square has shown that it can endure challenges from incumbents and other startups. It is one of the few fintechs that is introducing products on a consistent and successful basis.

The hidden weapon of Square is the Cash App which has a realistic chance of gaining significant marketshare and challenging Venmo as the preferred payments app in the US.

The Achilles heel of the company may be a recession which hits its core demographic hard, but such an event is unlikely in the next 12 months.

Lastly, this is not one of the safest investments as it should be obvious with any early stage tech company. I present it simply as an idea which I believe exists for a limited time based on factors which I believe are indicative of future success for the company.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a financial adviser. All articles are my opinion and are meant for educational purposes. Perform your own due diligence and consult a financial professional before trading.