It's time we talk about one of my favorite fintech innovators and disruptors square. What's going on everyone, i hope you're having a great day. My name is matt and in this video i will be giving you a quick update on square. So you have a better idea of how to play its earnings.

As a quick side note, i apologize for any audio issues. There's currently a huge storm going on outside, but i'll do my best to make sure that it's not disruptive if you're new to the channel and you're interested in stock analysis and stock updates join the party by hitting the subscribe button. Don't forget to turn on your notifications, so you don't miss any of the new videos all right, let's dive into it. I've been wanting to make a video on square for a while now because it's been doing incredibly well, in fact, since the start of this year, it's up a whopping 117 percent and at the close today, it marked a new all-time high at its low in mid-march Square was down a sizable 50 percent.

This mainly had to do with how bad small to medium-sized businesses were impacted by the coronavirus, which happens to represent a large consumer segment for square. These rough times were luckily short-lived. Since that low, the stock has managed to rally an impressive 323 to be fully transparent. I in no way saw this run coming and i sold my shares of square back in april.

I'm obviously kicking myself, but for all of you bulls who managed to hold on, i congratulate you, so the question now is: will square continue to run or will it come down and consolidate? The stock obviously has a lot of momentum right now, but that could either be bolstered or stymied by the next earnings report, which is on august 5th to better understand how the stock might react to this earnings report. Let's take a more in-depth look at both the fundamentals and technicals for those of you who are new to following the fintech sector over the past decade, it has been growing rapidly and square has been on the forefront of that revolution. It may be hard to believe, but its share price has rocketed over 1 000 since its ipo in november of 2015., with a return like that, it's more than fair to wonder if square will continue to run or is the party over? There is a lot of detail in this article, so if you're interested, you should check it out, but i 100 agree with the author. If you don't currently own square, you should consider investing on any upcoming dip.

Here are some things you can expect from the q2 earnings when square reported, its q1 results. In early may, revenue came out to 1.38 billion dollars, marking a 44 increase year over year. Its gross profit was 539 million, which was a 36 percent increase. There is a good chance you most likely know about square because of its payment processing methods.

This accounts for roughly 55 of its revenue. This is definitely a solid service, but i'm most excited about its cache app ecosystem. I think this image does a good job, highlighting the difference between the payment processing methods for sellers and the cash app ecosystem. If you're like me, when you think of square, you think of payment terminals and magnetic strip readers that has to do with all of this stuff and they've, obviously built more things on top to help out merchants, i honestly think the company has a bright future because Of how it's positioned in the person-to-person financial services, the cash app started out as a direct competitor to vemmo, but since then it's become so much more.

The cash card and direct deposit serve as banking utilities for its users. The boost is similar to a rewards program and its development in stock and bitcoin trading, put it in competition with the extremely popular robin hood and weibull. I'm not arguing that this ecosystem is currently better than a normal bank or a typical brokerage, but it is well positioned to make some serious improvements. Square and its cash app have been growing in popularity, but its growth rate will most likely be a key metric that both investors and analysts will be paying attention to with that being said, not everything is sunshine and rainbows.

Earnings estimates for q2 and 2020 have fallen significantly. In other words, the recent rally in many tech stocks, including square, are in part based on the optimism regarding a v-shaped economic recovery. A second wave of the pandemic could cause huge issues because small and medium-sized businesses would suffer and they represent a large portion of the revenue for square. On top of that, the recent run has made some people think that square is overvalued in the short term square stock will most likely be choppy and volatile, based on how good or bad their earnings report is.

Let's take a peek at the financial statements, so we can get a better idea of what might happen on a longer time frame from 2015. Until now, the gross profit has continually grown, which is an excellent sign. It seems to be a similar story with the net income from 2015. Until 2018, the loss became smaller and smaller, and then in 2019 it posted a net income of 375 million dollars.

Both the net income and gross profit are trending in a direction that should make investors happy here is the balance sheet. Over the past five years, squares cash has been growing and they currently have just under 2.5 billion. Their total current assets is 4.4 billion, and their total current liabilities is 2 billion. This ratio of 2 1 means the balance sheet is in pretty good shape.

The story isn't much different between total assets and total liabilities overall square owns more than it has in debt, and the company appears to be growing at a considerable rate from a long-term perspective. This is exactly what investors want to be seeing before we jump into the technicals. I wanted to show you what wall street analysts think about square. Their overall rating is neutral, with one being very bearish and five being very bullish.

The average rating is 3.29 out of 41 analyst, ratings 14 are either very bullish or bullish. 20 are neutral and seven are some form of bearish. I really don't understand what these guys are. Seeing that i don't so for the meantime, i'm just going to assume that they don't enjoy making money at the time i'm making this square is trading just below 137 dollars, and the average analyst price target is just above 100.

to get a better idea of the Support and resistance in this region, let's take a look at the daily chart, even though i am bullish on the company i wouldn't recommend buying at all-time highs from a risk to reward perspective. It would be better to create your position as close to support as possible. There is a chance that the resistance from mid and early july will turn into support, but the first major support i see is this low at 117. If the bull camp can't protect this, i would then be watching the low in july at 111.

If the bears pushed the market below this line, i would then be watching the key psychological level of 100. Finally, i really don't think it will happen anytime, soon or perhaps at all, but i would love to buy square at 84. This region has served as both support and resistance. You can be rest assured if the stock is ever trading close to this level.

I will definitely be a buyer. If you already have a long position, it's never a bad idea to take some of your profits off the table at all-time highs. I'm not saying it won't keep running in the short term, but there are some bearish signals. This is the rsi and i want to point out a discrepancy from the high in july and the new all-time high.

As you can see, the stock broke out to new levels, but the rsi didn't. This is referred to as bearish divergence, and it means less people are buying at this high than they did at the previous one. This type of action is commonly indicative of a future decline or consolidation. Obviously, this isn't guaranteed, though, and a binary event, such as an earnings report, can easily disregard technicals.

Part of the reason why i'm bullish on square in the long run is because i think that the financial sector is long overdue for some serious innovation. If you agree with that statement, but aren't specifically interested in investing with square, you should check out this etf arc, invest created arkf, which is a fintech innovation etf. This etf offers exposure to fintech innovations, including mobile payments, digital wallets, peer-to-peer lending, blockchain technology and risk transformation. It was created in 2019 and it has a small expense ratio of 0.75, as you can see here over the past three months year to date and one year, this etf has been considerably outperforming the s p, 500, and here the current top 10 holdings.

As you can see, there are some very popular names, square, apple, zillow, tencent and pinterest, just to name a few. You might want to consider investing into this etf if you don't want to take on the risk of putting your money into a single company, but you think the fintech sector will continue to grow if you made it this far in the video. I truly appreciate the support, if you have an idea for what stock or etf i should cover next. Let me know in a comment below if you enjoyed the video, let me know by hitting the like button, if you enjoy this type of content subscribe to the channel and don't forget to turn on your notifications, thanks for watching and until next time.

Best of luck in the markets, you.