Payments are not enough

The progression of the recently IPOed payments processor Square has been remarkable lately after cratering in value prior to becoming a public company. I have written before about the reasons why Square is a risky company (in Norwegian), in a risky space. However, Seeking Alpha makes some good points around possible positive development of Square if the company goes beyond its present core business and penetrates other realms. The article presents the collaboration with Facebook on data in order to create better ads. SQR2However, another way to expand into profitability is its recent move of providing loans to small business with high interest rates (10 -18% !). Indeed, Square may have become almost a consumer bank for small business  A quick read into the P&L of any consumer credit bank or aggregator is all you need to understand how profitable such a business model can be as long as you are one of the first ones to establish yourself… or just big enough. Square may have both elements to succeed. The next quarters will be decisive. If Square succeeds in new business areas while controlling its historically massive costs and shows a path to profitability, the company and the stock may become an iconic Silicon Valley success. If not, SQR will become either an acquired company or another IPOed Unicorn dead from starvation.

Forfatter: Salvador Baille

Daglig leder ved Intelis, et rådgivingsfirma med fokus på Innovasjon og teknologiledelse.

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