64.30 +0.18 (0.28%)
Pre-Market: 8:11AM EDT
|Bid||0.00 x 800|
|Ask||64.99 x 1200|
|Day's Range||63.20 - 64.43|
|52 Week Range||49.82 - 101.15|
|Beta (3Y Monthly)||2.93|
|PE Ratio (TTM)||N/A|
|Earnings Date||Nov 5, 2019 - Nov 11, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||84.06|
(Bloomberg) -- Today, it’s not just humans competing for work in banking. Machines are becoming a threat to warm-blooded number crunchers worldwide. Indeed, almost one-third of financial-services jobs could be displaced by automation by the mid-2030s, according to a report by PricewaterhouseCoopers LLP last year.Despite those stark forecasts, some optimists argue that the rise of machines at banks isn’t simply taking away jobs, but rather changing their definition and adding some roles.Job seekers with expertise in artificial intelligence, machine learning, and data science are among the most in-demand candidates in finance, according to hiring sites Glassdoor, LinkedIn, Hired, and ZipRecruiter. It’s not only disrupters such as Square Inc. or Stripe Inc. hiring this talent; legacy financial companies such as JPMorgan Chase, Capital One, and Morgan Stanley are scooping these people up as well. In the U.S. financial sector alone, job postings that list these big data skills as requirements increased almost 60% in the 12-month period ending in July, according to LinkedIn.Business and finance professors who are preparing students for future banking careers are also seeing the trend. Data scientist is the “hottest job function” now for employers, says Andrew Lo, director of the MIT Laboratory for Financial Engineering in Cambridge, Mass.Lo says data portfolio managers, who are charged with maintaining and maximizing the value of a company’s data assets, also are gaining importance. “We already have that happening informally because chief technology officers are playing that role,” he says. “But this has become a much more business-oriented set of challenges that the typical CTO might not be equipped for, so I think that’s going to evolve over time.”While machine learning has the ability to “augment” jobs and enhance the performance of organizations, it will also present risks and the need for “AI auditors” at banks, says Theodoros Evgeniou, a professor of decision sciences and technology management at Insead in Fontainebleau, France. As machines make more decisions in banking, he says, ethical and legal concerns will be raised that need to be addressed at the board level.“Let’s say you’re a bank and you’re giving credit based on credit scoring and machine learning, and your models are discriminating certain populations of people,” Evgeniou says. “If you’re then sued for being discriminatory, who is liable for this? If [the models] discriminate, you are liable.”There are also ways machine learning may indirectly create jobs. For instance, automating tasks previously done by humans in the asset management industry should theoretically reduce costs. Lower fees will likely increase demand for financial services and, subsequently, the need for more staff to service new customers, according to Guo Bai, a lecturer of strategy at China Europe International Business School in Shanghai. “It will probably be easier to serve clients that were previously excluded from financial services,” she says. These new clients may require a more human touch, Bai says, meaning more client relationship managers will be needed. Machine learning may also provide an opportunity to reinvent a career. While it’s not easy or affordable in all cases to go back to school, some financial sector employees who find themselves displaced by technology could be in a position to reskill. “Certainly in the financial sector people are already pretty highly trained, so I do believe they can be retrained to focus on data science and all of the job functions that are required to support data science analytics,” says MIT’s Lo. “That’s not true in all industries.” Help WantedAI expertise is becoming one of the most desired skills in finance. Think you have what it takes to automate the banking industry? Here’s a glance at some of the jobs requiring experience with AI, machine learning, or deep learning. Descriptions are based on ads on company sites and online job boards as of Aug. 5. Median base salaries for the roles are estimates from Glassdoor, as pay information wasn’t provided by the companies.Artificial Intelligence Platform Support EngineerEstimated median base pay: $116,760Main duties: One of the world’s largest banks is seeking an engineer capable of managing the massive server farms that are essential for its AI platform. The work can be fast-paced and high-demand. Expect to be on call.Must-have: Several years’ experience with middleware products and open-source operating systems, as well as a history of application development and implementation. Based on a job advertisement on Wells Fargo & Co.’s website.Artificial Intelligence Manager/ArchitectEstimated median base pay: $96,898Main duties: One of the “Big Four” accounting organizations needs “architects” with creative ideas for developing and deploying AI components at large companies. The job could involve working on anything from chatbots and virtual assistants to vision and language processing.Must-have: Among other things, the company is looking for at least a couple of years’ experience working with cognitive computing technology, IBM Watson, neural networks, augmented intelligence software for financial services, and cloud platforms.Based on a Deloitte job advertisement posted on LinkedIn.Senior Python Engineer—Machine Learning PlatformEstimated median base pay: $113,827Main duties: This bulge-bracket bank seeks an engineer fluent in high-level programming languages. The role comes with many responsibilities, but you’ll be on a team in charge of building pipelines that feed massive data into machine learning models for real-time predictions.Must-have: The bank cites lots of required technical experience, including a track record of developing distributed systems using Python.Based on a job advertisement on JPMorgan Chase & Co.’s website.Conversational AI Content StrategistEstimated median base pay: $59,306Main duties: If anyone has ever said you’re a great conversationalist, this job might be your next career move. You’ll be working on an AI-powered, voice/text digital assistant and “the hub” of the bank’s conversational commerce strategy. The strategist will drive the assistant’s “conversation design with brand flair.” Must-have: A background in writing and editing with some work in conversational user interfaces, AI, and chat or interactive voice responses.Based on a job advertisement on Bank of America Corp.’s website.Artificial Intelligence—Senior Digital Product ConsultantEstimated median base pay: $75,265Main duties: This role is part of this bank’s expansion plans for its virtual-assistant technology. It’s seeking someone to work on “future state” integration of its AI agent. The product consultant will lead its development during all stages, which include building, testing and acceptance, quality assurance, and reporting. Must-have: An interest in emerging technology trends and several years in a management role in a financial-services organization.Based on a job advertisement on Bank of America’s website.Machine Learning Platform Web SpecialistEstimated median base pay: $57,054Main duties: A love for data visualization might help in this role. The specialist will be tasked with creating web-based user interfaces for the bank and have a multitude of responsibilities, including constructing “visualizations that are able to depict vast amounts of data.”Must-have: A bachelor’s degree in computer science or a similar field and a strong understanding of machine learning algorithms, high-level programming languages, and neural networks. Experience with HTML, cascading style sheets, and web standards is required.Based on a job advertisement on JPMorgan’s website.Quantitative Analytics Consultant—Decision Science and Artificial Intelligence Financial Crimes Model ValidatorEstimated median base pay: $105,804Main duties: This bank is advertising a heavy-duty-sounding role with responsibilities to match. The hired candidate will work on a team responsible for validating and approving the machine learning and AI models behind marketing, credit scoring, financial-crimes detection, and fair-lending practices.Must-have: Several years’ experience in an advanced scientific or mathematical field. A background in sanctions screening and anti-money-laundering analysis will also help.Based on a job advertisement on Wells Fargo’s website. Note: Glassdoor uses a proprietary machine learning algorithm to approximate median base pay by job title, industry, and employer size. To contact the authors of this story: Siobhan Wagner in London at firstname.lastname@example.orgShelly Hagan in New York at email@example.comTo contact the editor responsible for this story: Stryker McGuire at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Square the circle: At the end of July, the mobile payment company Square announced it would be investing in a new space and a significantly larger workforce in downtown St. Louis, where company founders Jim McKelvey and Jack Dorsey grew up. Dorsey is injecting half a million dollars into the St. Louis Blight Authority, a private group that will help the city demolish some of its 7,000 vacant buildings. “The effect of St. Louis’ efforts will increase the value of central city neighborhoods while demolishing and depreciating the north side,” writes Michael Allen, a lecturer in urban design at Washington University in St. Louis.
[Editor's note: This story was previously published in June 2019. It has since been updated and republished.] No investment strategy suits all the people all the time. This is particularly true for young investors in their 20's and 30's. Youth not only has social advantages; it can provide a significant margin for your portfolio to grow. As such, high-growth stocks are ideal for the young-adult, millennial demographic.Talk to any financial advisor, and more often than not, they apply the Pareto principle for 20- or 30-somethings. Colloquially known as the 80-20 rule, advisors recommend that young investors have 80% of their portfolio in stocks, and the remainder in safer, interest-yielding assets. When it comes to millennial stock allocation, spring chickens should really consider high-growth stocks.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 10 Cheap Dividend Stocks to Load Up On Time is money, and in many cases, time is more valuable. That's because time can "buy" you money, but never the opposite way around. In this case, a younger investor's additional working years can help mitigate investments that have gone awry. Moreover, the extra time allows riskier investments to fully expand to their potential.But don't just look into risk-reward ratios for their own sake. Instead, as a young investor in his or her 20s or 30s, you should broaden your horizon. While I'm not against trading current trends, this is a perfect chance to take advantage of longer-term growth forecasts.With that in mind, here are the top 10 high-growth stocks to buy for young investors. Amazon (AMZN)Whenever discussions about high-growth stocks arise, Amazon (NASDAQ:AMZN) invariably makes most analysts' lists.Source: Shutterstock What's not to like here? Not only does AMZN leverage an enviable track record in the markets, management continues to forge ahead into new frontiers. Amazon is a disruptor among disruptors.But sometimes, high-growth stocks are so obvious that they're not obvious. We all know the adage that what goes up must come down. This applies to any investment, and AMZN is no exception.As I previously discussed, AMZN is on the verge of unprecedented greatness. Those of you who are in your 20's and 30's have some recollection of a time when ecommerce didn't overwhelmingly dominate the retail sector. But we're so close to a generation coming of age that has no clue about the prior brick-and-mortar hegemony.When Generation Z enters the workforce en masse, they will buy through Amazon and other e-commerce channels, no question. That's why you must consider AMZN stock. Carvana (CVNA)Carvana (NYSE:CVNA) takes a brilliant concept and brings it into fruition. Generally speaking, millennials don't share the same love for the automobile as did prior generations.Source: Carvana Part of the decline in interest is the haggling over the price that used to be a given when buying a new car.Enter Carvana. CVNA combines the tech wizardry that young people love with a centuries-old retail industry. Rather than negotiate with pushy or unsavory salespeople, buyers can instead browse cars online. When they find one they like, CVNA delivers their vehicle to their driveway. Plus, Carvana offers a money-back guarantee to soothe concerns about buying a car sight (almost) unseen. * 10 Stocks Under $5 to Buy for Fall Considering that young people do nearly everything online, Carvana is likely the future of car buying. That's one reason to buy CVNA stock. The other? Margins. Once the company firmly establishes itself, it has the potential to earn serious bucks. That's because CVNA charges a premium for its convenient services.So far, though, customers are willing to pay it, and that trend will continue with Gen Z coming aboard. TriNet Group (TNET)For those of you who have worked in Fortune 500 companies, you realize the intensity of large-scale organizations. In order to handle the needs of tens of thousands of workers, the biggest companies employ the best human-resources team. But what the needs of small and mid-sized businesses? That's where TriNet Group (NYSE:TNET) comes in.Source: Shutterstock TNET provides full-service HR for companies that are still in their growth phase. Essentially an outsourced HR firm, TNET offers comprehensive services for smaller organizations, but without the massive overhead.Therefore, management can concentrate its resources on its expansion strategies.TNET stock also makes sense from an industry trend point of view. Experts predict that by the year 2020, an astounding half of the U.S. workforce could be comprised of freelancers. Additionally, small businesses that employ fewer than 100 workers are not only becoming more prominent, they're collectively hiring millions annually.This new digital economy will require HR services. As a result, you'll want to keep a close eye on TNET stock. Canopy Growth Corp (CGC)The legal-marijuana industry generates significant controversy. However, one thing cannot be denied: high-growth stocks levered towards cannabis have been hot and a little more volatile than one might prefer. One such name is Canopy Growth Corp (NYSE:CGC).Source: Shutterstock Volatility aside, I'm digging CGC primarily because it's the most well-capitalized marijuana investment. Canopy sported a $14 billion-plus market cap, substantially higher than Aurora Cannabis' (NYSE:ACB) $7.7 billion.As InvestorPlace's own Bret Kenwell pointed out, that market cap rivals several well-known companies, including Macy's (NYSE:M) and Chipotle (NYSE:CMG).Ultimately, Kenwell advised to wait for a correction on CGC before jumping onboard, and that may now have happened. Either way, young investors must keep CGC on their shortlist. * 15 Growth Stocks to Buy for the Long Haul By the time millennials are looking at retirement, marijuana will have lost its Schedule I classification -- likely long before this point. History shows that the Prohibition era failed to curb Americans' desire for alcohol. History will eventually prove the same for cannabis.Indeed, as the Pew Research Center demonstrates, attitudes towards legalization have shifted positively. It's only a matter of time before the government listens to the will of the people. When that day comes, CGC will explode even higher. Square (SQ)Square's (NYSE:SQ) appeal is immediately recognizable to anyone who observes business trends.Source: Shutterstock As we discussed for TriNet Group, small businesses have grown rapidly since the Great Recession. Given the nature of technology in our lives, companies today value agility and specialization more than outright size.What makes SQ stock a compelling investment is that it evens the playing field for small businesses. Square provides portable credit-card readers that attach conveniently to your smartphone. That enables entities ranging from sole proprietors to small corporations to quickly setup a payment platform. * 7 Safe Dividend Stocks for Investors to Buy Right Now Another factor driving SQ stock for the longer term? An increasing number of Americans are going cashless. According to a CNBC report late-last year, 50% of surveyed individuals reported they only carry cash half of the time they're out and about. Those that do carry cash usually hold $50 or less.Logically, this means we should see fewer cash-only businesses moving forward. And the types of businesses that would have once been cash only will likely gravitate towards Square's unique and convenient solution. Despite SQ stock's bumpy year, it still has added nearly 10% since January. Control4 (CTRL)I first covered Control4 (NASDAQ:CTRL) in late July of this year. Since then, CTRL stock has jumped as much as 47% in the markets only to come tumbling down and then rally again, climbing 45% in the past three months.Source: Shutterstock Like the other mentioned names, CTRL will likely gain on broader social trends, making it a strong pick for young investors and a potential high-growth stock.Control4 specializes in home-automation solutions, providing clients with interconnectivity benefits along with security. Given that anything can happen these days, people love the peace of mind of having an integrated smart-home system.But beyond the practicality that Control4's products and services provide, its target audience is extremely receptive to the company's offerings.Experts forecast that by the year 2020, home automation will become a $40 billion industry. Further, 47% of millennials own smart-home products. And 81% of prospective homebuyers are likely to select a home that has installed automation services. General Electric (GE)General Electric (NYSE:GE) is a controversial pick for many reasons, but the biggest is this: for years, GE has become a negative-growth stock. Why on earth would I then include it among high-growth stocks?Source: JPstock / Shutterstock.com Admittedly, the idea isn't conventional and considering its history, GE stock is incredibly risky. The markets agree, selling it off by 55% last year alone. But recently it's been making a comeback and the opportunity is enticingly lucrative.That sentiment is doubly valid for young investors who have the extra margin to patiently wait out the current trouble.The question everybody asks is if management can truly turn this sinking ship around. While speculative, I think GE has a legitimate chance. * 7 Stocks Under $7 to Invest in Now Analysts appear to be bearish on General Electric because of its lagging Power division. The fear is that renewable energy will overrun the company.I say, not so fast! While renewable energy "works," it's still economically inefficient and while this is being corrected, GE has time to adapt, whether that means growing its own renewable energy offerings or compensating for lost revenue in other areas.That's the ticket for GE stock. However, it will take time, which suits young investors perfectly. Voyager Therapeutics (VYGR)As millions of families worldwide can attest, watching a loved one suffer from a neurological disease is a painful journey. It can also be agonizingly frustrating as a once proud and independent person succumbs to physical and mental ailments.Source: Shutterstock Voyager Therapeutics (NASDAQ:VYGR) aims to put an end to this scourge, and I give them all my blessings. Utilizing a common, naturally occurring virus called adeno-associated virus (AAV) as a "treatment carrier," VYGR scientists propose to target diseased cells for repair.A significant advantage for using AAVs is their long lifespans. A single dose could potentially lead to lifelong benefits.The technology is very promising but VYGR is still relatively in the early phase. Naturally, Voyager's financials aren't the greatest, and its share price is volatile.However, if the company manages a breakthrough, we will witness a paradigm shift in how we approach ailments such as Parkinson's disease, and it will become a hig-growth stockFurthermore, gene therapy holds the key for solving a multitude of other diseases. VYGR is among a few high-growth stocks that could spark a medical revolution. Young investors should carefully watch this space. Kinross Gold (KGC)Although regular readers probably know my work involving cryptocurrencies and cannabis, I'm also a believer in gold.Source: Jeremy Vohwinkle via Flickr (Modified)At the risk of sounding like some 2 a.m. infomercial, a healthy portfolio should include some physical precious metals, or at least SPDR Gold Shares (NYSEARCA:GLD).But for those who want to take a little bit of risk, I'd look into Kinross Gold (NYSE:KGC).As with many other high-growth stocks in the gold sector, KGC has a shaky history. Primarily, Kinross made expensive acquisitions at or near the gold bubble earlier this decade. Investors subsequently punished KGC stock. * 3 Monthly Dividend Stocks to Buy Today However, the shares have rebounded 21% over the last month as gold prices have increased to multi-year highs. And with the geopolitical and international trade outlook growing more uncertain, there's a good chance that gold prices will keep climbing for a long time.It's not a perfect story, but young investors have the time to wait out KGC, which looks poised to become a high-growth stock. Mitsubishi Heavy Industries (MHVYF)I'm going to close my list of high-growth stocks with a contrarian play, Mitsubishi Heavy Industries (OTCMKTS:MHVYF) a core company of the Mitsubishi Group. Source: Shutterstock With many Asian investments focusing on Chinese companies, it's easy to forget about Japan. However, I think this is a misstep that young investors should capitalize on, and MHVYF is ideal for this purpose.Let's pick the low-hanging fruit first. MHVYF is a renowned manufacturer of mining and industrial equipment.Although purely conjecture, Mitsubishi could play a significant role in Japan becoming a natural-resource exporter. According to CNBC, Japanese researchers found a "semi-infinite" amount of rare earth metals off Minamitorishima Island.Before you get too excited, the critical metals were discovered in the deep-sea bed, so currently, it's not economically feasible to extract them. However, where there's a will there's a way, and Mitsubishi could play a significant role. If so, this could launch MHVYF.Another trend working in Mitsubishi's favor is military conflict. With unpredictable North Korea mere miles away, Japan needs to beef up its defenses. I'm not talking about another war, but rather, a show of force to dissuade enemy attacks and provocations. Mitsubishi is one of Japan's major military contractors, and all geopolitical events point towards a rising MHVYF share price.As of this writing, Josh Enomoto is long gold bullion. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The 7 Best Dow Jones Stocks to Buy for the Rest of 2019 * 5 Boring Stocks to Buy This Summer * 7 S&P 500 Stocks to Buy With Little Debt and Lots of Profits The post 10 Best High-Growth Stocks to Buy for Young Investors appeared first on InvestorPlace.
Back in 2014, JPMorgan’s Jamie Dimon warned that Silicon Valley was coming to eat the banks’ lunch. The technology companies are now starting to chow down. , a virtual interface on the iPhone to help keep track of spending and a physical titanium card for fashion victims.
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Square (NYSE:SQ) was trading at $82.3 in the second week of July. In a matter of one month, Square stock has slumped by 23% to current levels of $63.3. The sharp decline has been triggered by the company's second-quarter results and softer guidance for the third quarter.Source: Shutterstock However, I believe that the market has overreacted on the results and guidance. The decline in Square stock is a buying opportunity because of positives in the quarterly results and other triggers that can reverse the stock sentiment.Overall, the SQ stock is worth buying in the broad range of $55 to $65.InvestorPlace - Stock Market News, Stock Advice & Trading TipsSince the second-quarter numbers and guidance have come out, the entire focus has been on the near-term negatives. In particular, decelerating growth is a concern noted by the analyst community, in general. If you take a moment to consider the upsides, though, Square gets way more interesting. A Closer Look at Square StockSquare Inc has established a robust omnichannel platform that delivers "end-to-end" service. One of the key targets of the company has been to attract merchants with a GPV in excess of $500,000. It is worth noting that the company had 19% sellers with annualized GPV in excess of $500,000 in 2Q17. * 15 Growth Stocks to Buy for the Long Haul This increased to 22% in 2Q18 and further increased to 26% in 2Q19. As the number of big merchants increase, it is likely that the company's total and adjusted revenue will swell higher.Also worth noting is that SQ reported adjusted EBITDA margin of 7% in 2016, 14% in 2017 and 16% in 2018. For the second quarter, the company's adjusted EBITDA margin was 18.7%.Further, considering the mid-range of the guidance, the company is likely to report an EBITDA margin of 18.3% for 2019. I see sustained margin expansion as a positive. While product development cost is likely to remain high, EBITDA margin expansion can potentially sustain as sales volumes trend higher.The company also announced the sale of food ordering platform Caviar for $410 million. While this will have a negative impact on revenue, the sale of loss-making Caviar is likely to be positive in the long-term. It allows Square to focus on omnichannel commerce, financial services and expansion in international markets.Square reported cash & equivalents of $1.2 billion for June2019. Considering the sale of Caviar, the company's cash buffer is likely to be around $1.5 billion.While analysts worry about a deceleration in growth, I believe that the cash buffer will be utilized for inorganic growth in focus areas. Therefore, it is too early to assume that the company is moving towards a lower growth momentum and the stock should trend lower.I remain bullish on the company's cash app. For the second quarter, the cash app generated $135 million in subscription and transaction-based revenue.Further, the cash app generated $125 million in Bitcoin revenue. It is worth noting that Bitcoin revenue surged to $125 million in 2Q19 from $37 million in 2Q18. With the cash app having a Bitcoin deposit feature, the app is likely to attract individuals. The growth in cash app revenue is already worth noticing. From $1 million in the second quarter of 2016; revenue has surged to $135 million (excluding Bitcoin). With multiple monetization sources, I am bullish on robust revenue growth to sustain. Final Words on Square StockConsidering the factors discussed, I don't see a near-term growth deceleration as a concern. Square stock should trend higher from a market perspective beyond the near-term growth concerns.It is worth mentioning that Square continues to work towards expansion in the financial services sector. This includes a potential banking license in the future. The company's debit card for small businesses is also packed with attractive features and is likely to witness traction.Overall, Square stock is in a buying zone. I expect organic and potential inorganic growth in the next 12-18 months to take the stock higher from current levels.As of this writing, the author did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post This Market Overreaction Is Just One More Reason to Buy Square Stock appeared first on InvestorPlace.
In late 2018, Square Inc (NYSE:SQ) saw its surging stock get flattened, falling over 35% from its all-time high of $101.15. Like many growth stocks, SQ stock bottomed out in December. However, despite delivering a favorable earnings report, the company's stock has still found resistance at the $80 mark.Source: Shutterstock After a second-quarter earnings report, in which the company beat expectations for both revenue and EPS, the stock suffered a sharp sell-off. So What's the Story With Square?One reason for SQ stock's selloff was their announcement that it would sell off Caviar -- its successful food service business unit. Depending on how you do the math, Square either sold Caviar for a tremendous profit, or a tremendous loss, but that's just money.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis deal gives Square the opportunity to reach more customers. Because of Caviar, Square now processes about 25% of their revenue via food service. And the sale of Caviar integrates Square with DoorDash.The bottom line for Square is that Caviar never seemed like a business they were in for the long haul. How Is Square Expanding Its Ecosystem?Despite selling off Caviar, Square is still very interested in expanding its reach beyond traditional payment processing.The payment processing sector is becoming crowded. Competition will continue to increase as bigger companies seek to enter the space. Square is addressing this issue by building out add-on services such as inventory management, shipping, payroll and lending to make the cost of switching become higher for their existing customers.This is consistent with Square's stated desire to offer services that will allow them to compete with traditional banks. However, one of the most intriguing elements of Stock's strategy to differentiate themselves from an increasingly competitive field has been their embrace of cryptocurrency, in particular bitcoin. Square Is Making a Big Bet on BitcoinAs businesses wrestle with their need to accept bitcoin as a form of payment, Square is clearly trying to establish a leadership position in this space. Investors may struggle to see the role a payment processing company like Square or PayPal (NASDAQ:PYPL) has in the crypto revolution.After all, the whole point of cryptocurrency is its emphasis on security. But as Square's CEO Jack Dorsey said in a 2018 interview, the internet is looking for a native currency to free it from the traditional regulatory and legislative restrictions that can slow down startup companies like Square.The gamble seems to be paying off. In its second-quarter earnings report released on Aug. 1, Square reported its crypto-friendly Cash App made $125 million in revenue from bitcoin, a significant leap from the $65.5 million Square raised from bitcoin in Q1.Not surprisingly, the increase in revenue led to a higher gross profit -- to the tune of $2 million as opposed to $832,000 in Q1.And other companies are taking steps to ensure they have a place at the table. Visa (NYSE:V) and PayPal are actively looking to partner with Facebook on its proposed Libra cryptocurrency. SQ Stock Is Displaying Conflicting FundamentalsA quick review of the fundamentals gives investors a picture of a stock that is sending mixed signals. On the one hand, SQ stock is up nearly 40% from its 52-week low of $49.82. On the other hand, the stock is down over 35% from its 52-week high of $101.15.Square has also seen its consensus rating move from a Buy 30 days ago to a "hold" rating, and has seen its consensus price target dip from $86.80 to $84.69.When you consider that Square is in an increasingly competitive space and has yet to turn a profit, you can understand why investors might be a little concerned about the company's valuation. What Direction Is SQ Stock Headed In?After a favorable earnings report, SQ stock made a move last week that broke a trend of higher highs and higher lows. Some people may worry about how Square will protect its turf while expanding its customer base, particularly after the company abandoned Caviar which was, if nothing else, a cash cow.However, as their Cash App (Square Cash) and other services move it into the individual financial services space, the company has a well-defined ecosystem that gives it the opportunity to reach businesses and customers.In fact, the Cash App has exceeded expectations by growing from $1 million in quarterly revenue to $135 million in quarterly revenue over a three-year period and that doesn't include bitcoin. And with a price target that is setting SQ stock up for a 30% increase from its current level, there looks to be tremendous upside.As of this writing, Chris Markoch did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 15 Growth Stocks to Buy for the Long Haul * 5 More Cloud Stocks With Plenty of Potential * 5 Clean Energy ETFs to Buy for 2019 The post Square Bets Big on Bitcoin appeared first on InvestorPlace.
(Bloomberg) -- When Swedish banking firm Klarna became Europe’s most valuable financial technology startup last week, it was only the latest sign that digital finance has escaped the troubles afflicting legacy lenders.Its latest fundraising gave Klarna, which facilitates online installment payments, a $5.5 billion valuation. European fintech companies raised $3.3 billion in venture capital in the first half of 2019, up from $1.9 billion in the same period last year, according to data compiled by CB Insights. In contrast, an index of European Union banks has dropped 39% the past 18 months.“Investors are drawn to it because it’s the perfect blend of a huge, mature industry which, empowered by technology, can deliver vast returns, far in excess of what you see if you’re starting up out of nowhere,” said Ben Brabyn, chief executive officer of Level39, one of Europe’s largest fintech accelerators, in an interview.Here are a few other recent industry highlights and what to watch out for next.Fintechs Flout Brexit WorriesLondon fintechs defied the Brexit gloom that descended on the the U.K. Transferwise Ltd. announced a funding round in May that valued the eight-year-old company at $3.5 billion, up from $1.6 billion in 2017. A few weeks later, online bank Monzo closed a new funding round doubling the startup’s valuation to more than $2.5 billion. Meantime, Revolut Ltd., while being eyed by regulators for possible compliance lapses, expanded into stock trading. They weren’t all winners: shares of peer-to-peer lender Funding Circle Ltd. have plunged 65% this year.IZettle’s Surprise PayPal SaleIt was the midnight deal that surprised many -- PayPal Holdings Inc. purchased iZettle AB for $2.2 billion in May 2018 the night before the Swedish startup had planned to price its shares in an initial public offering. Stockholm-based iZettle competes with Twitter co-founder Jack Dorsey’s Square Inc., and Canada’s Shopify Inc.Adyen Soars After IPODutch payments processor Adyen NV hit headlines for two reasons last year. First, in February, it was announced the Netherlands-based firm would replace PayPal as EBay Inc.’s global checkout service. Then in June, it held a billion-dollar IPO and saw its shares surge 90% in the first day of trading. The company, whose clients include Netflix Inc. and Spotify Technology SA, is now valued at 20 billion euros ($22.4 billion)Worldpay’s $35.5 Billion DealAs one of the world’s biggest payments firms, Worldpay Inc. handles about $1 trillion annually -- similar to Chase Paymentech. When Fidelity National Information Services Inc. said on July 31 it’d completed its $35.5 billion acquisition of the company, data compiled by Bloomberg showed the combined business will be the world’s biggest in the processing and payments industry. It wasn’t a bad day for Ohio-based Worldpay, which less than two years earlier had been a British enterprise snapped up for 7.7 billion pounds ($9.3 billion) by U.S. merchant acquirer Vantiv.What’s Next?N26, the German mobile bank backed by billionaire Peter Thiel, announced in July it had extended its most recent fundraising round to $470 million, at a valuation of $3.5 billion. The company is expanding from Europe to the U.S., betting it can attract users from established lenders and credit card providers with free accounts, fewer fees and phone alerts.Other companies to watch include Revolut, which despite multiple run-ins with controversy remains exciting to investors after it held one of the biggest fundraising rounds for a European fintech last year, and app-based banks Monzo and Starling, which are attracting customers at a rapid clip.Further down the line is the U.K.’s online lender Zopa Ltd., which its CEO Jaidev Janardana said in July could potentially hold an IPO in 2021.“The valuations are encouraging but they’re not enough. They’re just an early indicator. The important numbers to watch are the customers,” said Brabyn. “We all need to step up to demonstrate the public value of what we do.”To contact the reporter on this story: Ali Ingersoll in London at email@example.comTo contact the editors responsible for this story: Giles Turner at firstname.lastname@example.org, Nate Lanxon, James HertlingFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The gains in Shopify (NYSE:SHOP) stock continue. SHOP stock now has risen 176% in 2019 alone. It has more than tripled from December lows.Source: Shutterstock Shopify stock has had a truly staggering run. The company has added nearly $25 billion in market value in seven and a half months. And all the while, observers -- myself included -- have argued that SHOP stock is a bubble, or at the very least significantly overvalued.Yet Shopify stock marches higher regardless, climbing the proverbial "wall of worry." And as I have written of late, the stock could keep going. Fulfillment plans offer another reason for bulls to see even greater profits down the line. More broadly, investors have shown a willingness to pay up for growth.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Safe Dividend Stocks for Investors to Buy Right Now I still believe Shopify is overvalued. I called it out last month as one of 10 stocks set to crash at some point. The question after another blowout earnings report is when that point might come -- and what will be the catalyst. Could a Market Decline Hit SHOP Stock?The most obvious catalyst would seem to be a broad market decline. After all, when markets struggled in the fourth quarter of 2018, SHOP stock did as well.That said, SHOP didn't perform that badly. It declined 16% in the fourth quarter. But the NASDAQ Composite fell 18%. Square (NYSE:SQ), another high-growth, high-priced, small business play, dropped 43% over the same period. And some of the pressure on Shopify stock came from a secondary offering which the company priced at $154.Meanwhile, markets have seen some pressure at times this year, yet SHOP has been largely immune. Its only real weakness in 2019 came in June, after Roth Capital and Wedbush downgraded the stock on back-to-back days. (Those firms, too, cited valuation concerns.) There have been enough periods of market volatility this year to rattle Shopify stock again. So far, they've had little, if any, impact. SHOP Stock's Rising CompetitionAnother potential point of pressure could be on that competitive front. Square is looking to challenge Shopify as it integrates its 2018 acquisition of Weebly. Facebook (NASDAQ:FB) unit Instagram has launched In-App Checkout, which allows brands to sell products directly through that platform. And of course, Amazon (NASDAQ:AMZN) offers small businesses enormous reach as well.But it's tough to see anyone taking down Shopify any time soon. Going forward, the nature of digital platforms is that it gets harder for competitors to gain as those platforms grow and network effects take hold.And it's not as if anyone can simply enter the market and succeed. As Barron's reminded readers last month, eBay (NASDAQ:EBAY) acquired GSI Commerce for $2.4 billion in 2011 in an effort to capture the same market as a then-nascent Shopify. eBay sold the business for $925 million four years later, and it was split up by the new owners in 2016.Shopify's growth may slow; in fact, it almost certainly will given its exponentially increasing reach. At least at the moment, it's hard to see rivals gaining much, if any, market share. The Cycle TurnsI still believe there's one key risk here that investors haven't properly discounted: the macroeconomic cycle. Small businesses are notoriously at risk when a recession hits.Obviously, investors aren't terribly worried about this fact right now. Cyclical stocks on the whole are trading at low multiples -- yet SHOP stock keeps gaining. As cyclical fears have rattled U.S. stocks at points this year, SHOP has been unaffected.This is a company that still gets over 40% of revenue from subscriptions rather than its take rate on the sale of goods. The number of customers matters. And if the businesses paying for those subscriptions fail -- whether because the economy turns or because more entrepreneurs exist than perhaps should at the moment -- Shopify's growth will slow dramatically. What Can Stop Shopify Stock?These risks are real -- but, honestly, they don't look all that likely right now. At the very least, they're unlikely to change the narrative surrounding Shopify stock any time soon.So what does? Maybe nothing. SHOP stock is expensive, but it has been expensive for all of 2019. Investors keep buying it. That may stop at some point -- but I'd hardly be willing to bet against SHOP stock in the meantime.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post What Stops the Gains in SHOP Stock? appeared first on InvestorPlace.
It's easy to make the bear case for Uber Technologies Inc (NYSE:UBER). The current UBER stock price -- even after a 14% decline over the past two sessions -- still suggests a market capitalization near $70 billion. Yet Uber isn't close to profitable.Source: Shutterstock In fact, Uber lost a staggering $5 billion in its second quarter, according to last week's earnings report. To be fair, much of that loss was due to stock-based compensation following the company's IPO. But even on an Adjusted EBITDA basis, Uber lost some $656 million in the quarter. In that context, $70 billion seems ridiculous.That said, this is a company with a path to growth. At least some of the current losses are coming from investments in areas like UberEats and Uber Freight. Those investments eventually will generate returns, or so the company hopes. And with a real opportunity in self-driving vehicles, in particular, growth can continue for decades to come -- with profitability likely to follow at some point, and possibly some point soon.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Safe Dividend Stocks for Investors to Buy Right Now But the long-term question remains: how much profitability? While the UBER stock price has fallen off a single earnings report, that's the question that really matters. And there's a very real probability that the answer is much worse than Uber shares suggest, even as they trade not far from post-IPO lows. The CEO's Case for UBEROn Friday, one day after Uber earnings, CEO Dara Khosrowshahi gave a lengthy interview to CNBC. The appearance certainly seemed like damage control from the notoriously PR-focused company, as the UBER stock price fell despite some good underlying news in the quarter.There's one passage from the roughly 20-minute interview worth calling out in the context of understanding the fundamentals behind the UBER stock price. CNBC's David Faber asked Khosrowshahi if he agreed that it was an "uphill battle" to get the company to cash-flow positive. Here's how the CEO responded:This is a 20% revenue margin business at 50, 60 plus percent scale. Every single year we add $15 billion of gross bookings at 20% margin - revenue margin. So that's essentially $3 billion of revenue that we're bringing in house. And you know, put that against a $656 million quarterly loss. And you see that with a couple of years of $3 billion-plus revenue coming in, you're going to be able to cover those losses. I am very, very confident of this. Can Uber Technologies Inc Hold Pricing?From a broad standpoint, that's the right answer. Uber will be able to grow to the point where Adjusted EBITDA is positive.Growth stocks across the market have soared this decade on the backs of similar models. And companies -- including both Uber and rival Lyft (NASDAQ:LYFT) -- have taken advantage of that fact to go public earlier than in the past.It's worth going through the exact metrics Khosrowshahi cites because they can also highlight the bear case for UBER stock right now. First, he notes that the business is at 20% "revenue margin." What this means is that Uber has a "take rate" around 20% of bookings, or the price that riders pay. (According to figures from the 10-Q, take rate actually was about 19% in Q2, excluding a one-time driver benefit in conjunction with the IPO.)That metric alone is a worry for Uber. Per its own filings, Uber's take rate has steadily declined in recent years. The key factor has been competition from Lyft and China's Didi Chuxing, who has expanded into Europe and Australia.And one real concern is that it will keep declining. After all, competition can create a "race to the bottom." More importantly, drivers may not be able to survive paying Uber 20% of the fare, while also maintaining and fueling their vehicles and being properly compensated for their time.The argument from Uber bears is that the model doesn't work. The company is funding its business through incentives to consumers and incentives to drivers. That combination can't last forever -- unless Uber (and its rivals) want to keep burning cash. While those promotional incentives have stabilized across the market, per post-Q2 commentary, that may not hold. The risk here is that there's always going to be someone out there willing to undercut the incumbent players. Does Operating Leverage Lead UBER Stock Price Higher?The CEO then notes that the company is running a quarterly loss (which, to be clear, is Adjusted EBITDA) of $656 million, or about $2.6 billion a year, while growing revenue at a $3 billion clip. In theory, that should narrow losses rather quickly.After all, this is a platform company, or at least believes that it is. And the reason platform stocks (think Etsy (NASDAQ:ETSY) or Match.com (NASDAQ:MTCH)) generally trade at high valuations is that incremental margins are huge. Once the platform is built, each extra dollar in revenue comes with minimal costs. So raising pricing, as Etsy did, or simply growing usage both lead profitability to move almost exponentially higher in a very short amount of time.$3 billion in revenue probably can't cover a $2.6 billion hole. $6 billion probably can -- at least if platform economics hold. But here, too, there are questions. New riders on the Uber platform, for the most part, need a corresponding amount of new drivers. (Existing drivers can increase their utilization, but only to a point.) And acquiring new drivers costs money. Either Uber has to market to them, incentivize them, or pay them.For most digital stocks, incremental margins are huge. For Uber, it's not clear that they are. The company's own financials don't show it: Adjusted EBITDA loss more than doubled year-over-year in Q2.To be fair, the company has kept up its spending as it has entered new markets, and looked to grow UberEats, in particular. The longer-term risk, however, is that Uber always will have to keep up its spending. Other BetsThere are real concerns as to whether the core ride-sharing business can ever really be profitable. After earnings, bulls and analysts pointed to a notable improvement in contribution margin from ride-sharing. The figure, according to the earnings slides, jumped to 8% from -4% in the first quarter. Some of the loss, then, is coming from spending on UberEats and autonomous driving, in particular.Again, this is a company worth $70 billion. GrubHub (NYSE:GRUB) is worth $6 billion. As Ian Bezek pointed out last week, Square (NYSE:SQ) sold Caviar to DoorDash for just $410 million. UberEats is going to have to be absolutely dominant to support even a fraction of the current UBER stock price.Uber Freight is intriguing, but faces stiff competition in an industry that has huge numbers of incumbent brokers (many of whom have similar technology). And the autonomous efforts don't necessarily solve Uber's problems: driverless cars certainly would have lower costs, but they'd also have commodity pricing, as MarketWatch contributor Rich Alton pointed out this week.The core distribution business has to reach profitability -- and likely material profitability -- for the UBER stock price to do anything but keep falling. That's not guaranteed. Khosrowshahi's math works on paper. The key question for Uber is whether it will work in practice.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Real Estate Investments to Ride Out the Current Storm * 7 Marijuana Penny Stocks to Consider for Those Who Can Handle Risk * 7 Safe Dividend Stocks for Investors to Buy Right Now The post The Biggest Long-Term Question for Uber Stock appeared first on InvestorPlace.
PayPal (PYPL) introduces instant transfers to bank accounts via Venmo which is likely to aid its competitive edge against the other tech giants trying to strengthen presence in the banking sector.
The Federal Reserve got some push to build a real-time payments network from the gas station lobby and, indirectly, Facebook.
As early August handed the stock market a vicious sell-off, Square (NYSE:SQ) stock fell harder than most. In the wake of a disappointing earnings announcement, horrified SQ stock investors endured the deepest two-day drop in the past three years.Source: Shutterstock The ongoing tariff war certainly didn't help the Square stock price, but there has also been concern surrounding the sale of the company's Caviar food-delivery business.Are the doubters and short-sellers justified in their anxiety, or is this really just a buying opportunity in disguise?InvestorPlace - Stock Market News, Stock Advice & Trading Tips No Caviar for Me, Thank YouAnnouncing the sale of Caviar wasn't exactly what the mainstream media pundits wanted to hear, it seems. Characteristic of the negativity was Jeff Cantwell of Guggenheim, who went so far as to terminate his designation of "best pick" for SQ stock and, worse yet, to slash his price objective from $94 to $80. Ouch! * 8 Dividend Aristocrat Stocks to Buy Now No Matter What Why the negativity? According to Cantwell (speaking on behalf of Guggenheim), "We view this as Square hitting the reset button on an important part of its business model." For their part, Square's management countered with the statement that selling Caviar to DoorDash will provide "clarity in how we operate and a clearer purpose and alignment for our planning, investment, and work moving forward."Personally, I tend to concur with the company's assessment of the Caviar divestiture. SQ is known as a payment app, plain and simple; I don't see any particular need for Square to try to become the next Amazon (NASDAQ:AMZN) and be all things to all people.Offering food delivery would have been a nice ancillary addition to the company's business model, but I don't see it as integral and as a prospective investor, I'm perfectly fine with Square sticking to doing what it does best. Besides, Square acquired Caviar in August of 2014 for only $44.3 million worth of stock, and then flipped it to DoorDash for $410 million worth of cash and stock -- not a bad five-year turnaround, I must say. Analyzing the SQ Stock DropYou might recall the intense selling pressure surrounding Square stock on the day after the second-quarter earnings announcement; the share price tumbled 15%, and by the time the bleeding subsided, SQ was more than 30% below the stock's 52-week high.Besides the Caviar sale, investors were shaken by the company's guidance, in which Square's full-year outlook was lowered from a net loss of five cents to nine cents per share, to six cents to 10 cents per share. In other words, the expected losses are projected to be somewhat deeper than Square's management had previously thought.To focus solely that is a mistake, I feel, as there are other metrics to illustrate the company's profitability. Take, for instance, Square's adjusted Q2 earnings of 21 cents share, an astounding 61.5% increase compared to the same quarter from the prior year. Also consider that during that same quarter, Square's revenues were $1.17 billion, signifying a very impressive 44% increase compared to the previous year; moreover, Square's adjusted revenues for the quarter were $563 million, marking a considerable increase of 46% over the prior year.Besides, the guidance disappointment might not tell the full story, as Square CFO Amrita Ahuja explained:I'd urge you to remember that this quarter, we've announced the transaction with Caviar. And so we will update you post the closing of this transaction, which we'd expect to happen later this year, with respect to guidance for the rest of the year.Thus, investors shouldn't be surprised to see a "revision of the revision" in the near future when it comes to that seemingly disappointing guidance. The Takeaway on Square StockGuidance isn't everything, and losing Caviar isn't the end of the world for Square; I'm standing by my overweight rating on SQ stock and am proud to say, "Good riddance, Caviar -- I never had a taste for you anyway."As of this writing, David Moadel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 8 Dividend Aristocrat Stocks to Buy Now No Matter What * 7 Stocks to Buy to Ride the Vegan Wave * 4 Safe Stocks to Buy Amid Trade War Turbulence The post Prepare for Sizable Gains with Square Stock appeared first on InvestorPlace.