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SQ (Square) Stock Investment Overview with Technical Analysis & Options Ideas

Today I want to take a look inside the company of Square and give you my thoughts about it as an investment.

I’ll give you some takes and takeaways that you could use to make your investment decisions.

Keep in mind on these aren’t recommendations to buy sell or trade any stocks. These are just my thoughts and opinions. You can always contact your financial advisor if you need direct support.

More about Square Company

If you haven’t heard of Square, it’s a payment processing company.

You can see the logo here. 

If you’ve never been to a craft sale, you should check it out. There’s a lot of craft sales like these. Here are some craft sales in Florida where a lot of business owners (especially individual business owners that have mom-and-pop kind of shop) do a lot of checkouts or festival checkouts using square.

And it makes it very convenient using their cell phone, credit cards and now all of a sudden you got a transaction when you show up there. In the past, you just did a lot of this by cash. And it’s cash only kind of thing.

But nowadays you’ll see a lot of these merchants. When you’re taking a walk, taking a stroll through these kinds of places, you’ll be able to do checkouts through a square system.

From my personal take, there’s a couple of things to look at, and they have a lot of hardware that you could go. Here’s on the go. There are terminals. There’s a lot to the business.

But before we get there, let’s just back up and take a look at it from what it’s been doing, looking at the stock chart and a little bit more.

Taking a look at the chart – Square

Here’s what’s been going on with the company. The company launched its IPO around 2015.

We hung out in this area for a little bit of time. And then had a nice explosive growth around 2017-2018. These were the main two years of growth.

And then it was just slightly accelerated, so we had that little pullback in 2018. And 2019 is just sideways. If you are looking at the company what’s it been doing recently, we’ve just had a sideways movement with the stock.

And in that case, you might say I’m a little more neutral on it, and that could be the case. But it depends where you’re looking at.

If you’re looking at it from a long-term perspective, right now, it’s been going sideways. And it could be a good investment that’s the long and short of it.

If you’re looking at it to day trade, it’s not a very volatile stock. It’s a little more tricky to day trade, and swing trade is a little bit easier. That’s because you’re looking for a multi-week hold. And right now we’re bouncing off of this 95 level.

And you might want to take some profits around 85. If you’re trading this with options, I would say the interesting approach when it comes to options is it does have some option premiums inside of it.

Here is Square right there. You can see trading at 68.54. Of course, when you see this, the price will be a lot different because we’ll probably publish this a week or two later.

Also, you could see right here the option premium. You’re only getting bid and ask when you’re looking at this; we have about a $1.34. So there’s not a lot of premium there juiced into the company.

When I look at this, you could do some trading with options with it. But the premium is weak. The approach I would take if I were doing this with some options, is you could still take a long-term approach with diagonals, which is very much like a covered call strategy.

Think of it as buying stocks and selling calls. You could see there’s your covered call strategy. And if you’re brand-new to trading or even trading options check out our courses.

Check out some option stuff there. We also have some things regarding passive dividend investing if that’s what you’re interested in.

In either case, I would look at something like this as an investment for this company. Of course, if you’re looking at a longer-term, you could do just a calendar and see how it projects. You could do verticals.

Something basic or directional would be fine with this as far as premium goes. Trading this for a month to month income you’re only getting about a dollar or 30 cents here on a day to day expiration.

And that’s not a lot of money. I would say on a monthly income; it’s not the best. But of course, doing something more directional verticals, diagonals all are fair game with this.

Looking deeper into the company

When you start evaluating what it does, it is a payment company.

If you go to our website and you buy a course, and you go through the checkout process, we have to pay the credit card companies the merchant fees to handle these transactions.

They take a little processing fee because it goes through servers and all this kind of stuff. It costs us more money as a business. But this is what Square does. Once they have the infrastructure set up, as long as they can have more and more businesses on their platform, it ends up being a great thing.

And in their platform, if you’re a local coffee shop, you could get something like a register.

And you could check people out. Here’s a stand right here – about $199 or $18 a month for 12 months. Here’s a square terminal. Then on the go, this is what I tend to see a lot at those fairs and trade shows, which we like to do with my wife and me.

We go check these things out, and you’ll tend to see a lot of these things when she buys local craft things, presents for Christmas for her families, and that kind of stuff.

You can see you swipe the card from the cell phone, and you’re good to go.

And the transaction is made. There’s a lot of great ways to do the processing. There are the taps you slide your card in right there. It depends on what your customers want and use.

And I find that there’s a lot of great hardware here with Square. That’s really what makes it powerful, along with their transaction fees. 

Payments Overview – Square, Paypal and Stripe

You could see there’s a lot of different things you can do. When you compare this, one of the big competitors to Square is PayPal.

PayPal is another big competitor. We’ve used PayPal actually on our website for a long, long time. And that’s how we made a lot of registrations payments. They’ve just been around a lot longer.

But in fact, what we’ve been switching to is another company called Stripe. All of our transactions right now on my websites are going through Stripe.

Stripe doesn’t have the tools that Square does. It’s just more for web sites, but they’re good at the website part. 

In either case, these are the big boys right now:

  • PayPal
  • Square 
  • Stripe

This one’s been getting a lot of attention, especially from new investors. That’s just because of the innovations. The guy that started is Jack Dorsey there with the Twitter guy. And when you check some of these things out, definitely take a look at where the company is.

You could look at do you want to invest in PayPal or do I want to invest in Square. And this is just a matter of personal taste, opinion and where your money will go.

Buy PayPal stock or Square stock?

Here is that post that will tell you why you should buy Paypal stock instead square.

They’ll mention things like always buy a cheaper and more profitable company.

This is one good approach. But remember the other approach is which one is growing more.

The thing is, maybe PayPal is a little bit more profitable. But if you have more innovation, then you can say there’s the argument that saying square could outgrow them.

It can because you have that extra innovation. It says, “Even though Square is growing faster than PayPal, it’s less profitable.”

That may be the case, but what’s your investment horizon. In this article or things like this, if you read stuff like this, you have to go back and understand what is your investment horizon?

What are you looking to do with your money? Because you’re not just going to have one investment anyway. That’s the big case and takeaway.

You could read these things, but the cheaper is not always better. That’s because if we take a look at GoPro, you see the point.

It’s super cheap, but that doesn’t mean it’s a great investment. It’s completely a whole different industry, but less expensive doesn’t always mean better.

You have to look at it where does it fit in my portfolio:

  • is it a long term trade 
  • is it a short term trade 
  • is it more an options trade 
  • is it a speculative trade 

And when you look at a Square, I would say this is probably more of a long term hold. And it should be more of a long term hold if you’re interested in the company. Trading it daily is a little tough. Trading it as a swing trade could be okay. If you’re looking to get into the stock, here’s my take on it.

I would wait until it’s either at lower levels here, and if you believe it’s stable, this is the stable level and nice support range.

Here at this range, there’s a bit of resistance. Let’s say you got in 100 shares here at near the bottom, or even right now, you probably want to take a little bit of profits around that $80 level. That’s just because of resistance.

And if it can continue to break out and move here to the upside, then fantastic. Then this stock is looking good for higher prices. But the issue is if we can’t break out of there right now, you’re just moving sideways, and then your money is being held.

Looking for a growth company, you’re not in a bad state and not a bad position because it is stable and moving sideways.

The question is: 

  • Can we get that breakout above here?

Maybe it’ll come back and bounce and then you could get a trend upward. If you just continue to move sideways and it starts to die down, I would more than likely get out right under that 50 level.

If that happens, then you’ve got some serious problems. This is critical support here. Even here, this was hitting some support at this level.

You can see those lows, and in that case, I would say give it time to digest until it can find its way or move sideways.

And partly also because here you could see the volume is a little bit bearish for now. But it’s small; it’s not anything major.

If you look at another volume like a McDonald’s, this has some more serious major bearish volume, which is more of a problem, I think.

Looking at earnings per share

If you’re interested and you’re looking at also the earnings per share, here’s what’s been going on.

Here I’m looking at earnings per share – estimates versus actual.

Here we had 0.14 – 2018 December.

Then 0.11, a little bit dip and there and then 0.21. Now we got 0.25. I could see the growth there is coming with that exception of the 3/30/2019 report. But otherwise, you do see a little bit of that growth continuing. It’s not anything extreme or a major at this point.

But it is a little bit there — analyst wise recommendations what do they say – somewhat of a buy, somewhat of a hold. And this is because we see this stock move sideways anyways. In that case, I get it. I get why they might say that. And I think there are 26 analysts.

That’s what they are saying. And in general, when you look at this chart, that’s also what we see as well. Look at Square again. If you got it, it’s more of a hold company right here just because of that sideways action.

What about Dividend?

There is no dividend. If you’re looking at it as a dividend play, you can’t get a long-term hold dividend.

This is why I would look for maybe more of the option strategy on this. And do something more like a diagonal if it moves up.

And even then, you could do perhaps a different diagonal right here.

All of a sudden, maybe there is no dividend, but this is like a dividend substitute. That’s because now you’re making money as time continues to erode. You go ahead and make it from the options.

It’s like a substitute. That’s the way I would approach it if you want some dividend insights. If you’re interested in reading more about the company, check out that s1 on the website.

This is a long document. Most people don’t read these things in detail. The exciting thing for me if you don’t know about the company, it’s an excellent way to get an overview.

One big thing is where they’re looking to grow and where they’re looking to shift. Here are payment and point-of-sale service.

Our growth strategy – this is where I would look at and start looking at these things.

If you’re looking at it for the long haul, where’s that company going to grow from. And here: “Innovate and provide sellers with access to new payment methods.

We’ll continue to introduce new payment products and services such as Square cash, square readers for newer technologies, and the benefit of new and existing sellers.”

They’re looking at square cash, credit cards other things like that. And they’ll just continue to expand slowly. The question is, will they continue to grow, and will they continue to be stable.

MasterCard, Visa, and PayPal Companies

When you look at something like a MasterCard, you can see that these companies continue to grow. They are in the financial sector that continued to make money. All they got to do is get more signups. And once they attract those people if they like using the system, it’s tough to switch.

For us, it took like a year to switch from PayPal to Stripe. That was the case because we were so integrated. But once they do, it’s hard to leave. The same thing here – look at Visa. It just continues to go.

We got PayPal here. It continued with growth. They say PayPal is a little cheaper when you’re looking at who’s profitable. But don’t find PayPal may be growing as much anyways just been around for so long.

Now you have Square right here. If you check this out right now, you’re sideways consolidation trend.

But if you’re looking at it for a long term hold, you’re getting it at a stable level. And right here, this is what I would watch – the critical spot 55, 50. If they break below those levels, that’s where you’d be concerned or dumping the stock.

If you’re getting in it early and you’re okay with the sideways action, a nice breakout above 85 would be good. But I would take a little bit of profits by the time that stock hits 80. If it breaks above 85, you could play a little or around here. And then maybe you might get some upward level.

Keep in mind: you will have issues around that 95 area. And that’s just because we had some surge and price action there where the stock just exploded.

And then we had a pullback. There’s some seller still staying up at those levels here as well. But beyond that, that’s my overview for the stock.

Final Word

I hope you got some excellent insight on the stock. Depending on where you’re positioning, long term, short term, day trading, swing trading, or option trading that gives you my perspective.

And you have to look in the mirror and see what makes sense for you. That’s because everybody’s looking at this situation from a different perspective from different investment tastes.

And you have to know which burger or which sushi tastes better for you.

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