Moreover, as a comprehensive Digital Wallet incorporating Square’s seller ecosystem, Cash App could integrate offline and online commerce, distinguishing it from both traditional and challenger banks. Today, Cash App offers users banking services such as direct deposit, debit cards, ATM access, a platform to invest in equities and bitcoin, a rewards program, free transfers from the US to the UK, and integration with Square sellers. ARK Invest currently offers some of the best performing ETFs over the past five years. Disclosure: This work is licensed under a Creative Commons Attribution-Non-Commercial 4.0 International License. To foster healthy debate, we have published an extract of our Square valuation model. If primary and secondary users each were to monetize at 30% instead of 20%, its price target would approach $500, delivering a 26% compound annual rate of return during the five years ended December 2025. Square Capital, Square’s small business lending arm, increases its originations as a percentage of gross payment volume (GPV) from 2% in 2019 to 4% in 2025. The projected share price changes substantially dependent on Cash App’s monetization level. The Lightning Network could provide an additional revenue stream for Square. Intentionally, we have not incorporated the potential for Square’s international business, an important call option. Perhaps most important on the cryptoasset front, Square could build long term shareholder value through its Square Crypto initiative. Modifiable variables are marked in red. According to Ark Invest’s chief executive, the Bitcoin ecosystem has not seen the end of institutional investors. Other research puts the average revenue per retail bank customer at $413. Cash App also is leveraging innovative marketing strategies to attract new customers across all demographic groups in the US. Why invest in ARKK Focused on ARK’s belief that innovation is key to growth, the ARK Innovation ETF is built on the cornerstone investments that present the best risk-reward opportunities from ARK’s innovation-based themes. ARK's statements are not an endorsement of any company or a recommendation to buy,sell, or hold any security. [5] The network effects associated with peer-to-peer payments could prove more effective than those that Facebook, Google, and other social media enjoyed 10 to 15 years ago. The five industries that could be disrupted by innovation in the coming years. In 2025, Cash App monetizes 20% of its estimated 75 million monthly active users (MAUs), its “primary” MAUs, at the revenue per digital user generated at JP Morgan Chase, Bank of America and Wells Fargo on average in 2019. In an episode of ARK Invest’s In the Know series, Cathie Wood says she is witnessing a spike in institutional interest in Bitcoin. All statements made regarding companies or securities or other financial information on this site or any sites relating to ARK are strictly beliefs and points of view held by ARK or the third party making such statement and are not endorsements by ARK of any company or security or recommendations by ARK to buy, sell or hold any security. Among them are the four described below. In contrast, while Visa credit cards impact millions of consumers and merchants, many third parties sit between them, preventing Visa from engaging with either consumer or businesses in real time.[6]. ARK focuses on innovation so that our investors can capitalize on four market inefficiencies. Cash App could use Bitcoin to overcome the fragmented and inefficient financial infrastructure in Africa and other developing geographies, however likely would still face Know Your Customer (KYC) and Anti Money Laundering (AML) requirements and other cross-border regulatory challenges. In the future, we anticipate that Cash App will offer a range of services comparable to that of traditional banks today, including personal loans, credit cards, mortgages and insurance. View Ark Invest SQUARE - Google Docs.pdf from ECN 135 at University of California, Davis. Square Crypto Unveils the Lightning Developer Kit See Section #2 and #3 Follow @CathiesArk Cathie's Ark is not affiliated with Ark Invest or Cathie Wood Quotes are delayed 15 minutes Graphs, numbers, and charts should only be taken as approximations. Certain of the statements contained herein are statements of future expectations and other forward-looking statements that are based on ARK's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Published 30/9/2020. If it were to cut out the middlemen and facilitate payments directly between sellers and Cash App users, Square could leave pricing unchanged and almost triple its net take-rate or lower pricing and undercut most competitors. Please remember that there are inherent risks involved with investing in the markets, and your investments may be worth more or less than your initial investment upon redemption. Square’s Seller Business: A Superior Value Proposition. Bitcoin’s success could be Square’s success, suggesting that grants to Bitcoin open source developers and marketers could benefit Square in the long term. Square Capital, Square’s small business lending arm, increases its originations as a percentage of gross payment volume (GPV) from 2% in 2019 to 4% in 2025. When one of its sellers accepts a $50 payment, for example, Square charges $1.47, or 2.95%, but retains only $0.50, or 1% of the purchase value, as its net take-rate. She made concentrated bets on hot stocks such as Tesla, Roku, Square and biotechs boosted by the Covid-19 pandemic. As always, we are forever grateful for the most exciting fund manager on Wall Street, Ark Invest, to not only produce five future relevant ETFs for us retail investors to buy, but also publishing exactly what it’s buying every day and for each ETF. We will welcome all questions, feedback, and constructive criticism. We describe Cash App’s innovative marketing strategies in one of our previous blogs. As a result, Cash App’s ARPU could be multiples higher than the $260 modeled in our base case during the next five years. Forecasts are inherently limited and cannot be relied upon. In July 2020, Square began recruiting for an Italian-speaking customer support position[7] and, in September, Cash App was looking for a European Operations Manager. download the GitHub extension for Visual Studio, https://ark-invest.com/analyst-research/square-valuation, https://ark-invest.com/wp-content/trades/ARK_Trades.pdf. This methodical approach seems likely to pay dividends, especially in Europe, during the next five years. Feel free to change variables to battle test our assumptions and share your thoughts with us. Further, there is no assurance that any strategies, methods, sectors, or any investment programs herein were or will prove to be profitable, or that any investment recommendations or decisions we make in the future will be profitable for any investor or client. Square’s seller business continues to expand, growing transaction-based revenues at a 19% annual rate through 2025. While credit cards have commoditized during the last ten years, Square has focused on enabling businesses to grow with a suite of software services and access to working capital. For both social media and peer-to-peer payment applications, the utility of the networks increases as an exponential function of the total number of people on the network. ©2021, ARK Investment Management LLC (“ARK” ® ”ARK Invest”). To approach this rate of monetization, we believe Cash App has to solve three challenges: 1) launching and monetizing new products, 2) becoming the primary consumer financial services provider for users and, 3) perhaps most important, serving higher income demographics. This material is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by ARK. We believe that Square will enjoy several growth opportunities beyond the scope of this blog and valuation extract. These companies such as Tesla, Square, and Illumina are just some of the companies form the backbone of Ark Invest’s different funds. The ARK Fintech Innovation ETF (NYSEARCA: ARKF) is a prime example of an ETF with a slew of tailwinds and many of those are derived from two marquee holdings: Square … In our view, Cash App offers users the most cost-effective and streamlined products and services in the financial services industry as it builds personal relationships that lead to efficient and effective cross-selling. Wood bets that big companies, especially tech firms, will follow in the footsteps of payment giant Square and Michael Saylor’s MicroStrategy and purchase BTC as a hedge against the dollar. Non-bank providers like Charles Schwab or Robinhood for investing, LendingClub for personal loans, and RocketMortgage for mortgages are proliferating, perhaps because consumers want to diversify their risks or because banks cannot convince users to agree to more than one product or service. Ark invest square analysis Figure 4. Source: ARK Investment Management LLC, 2020, On average, Wells Fargo, JP Morgan Chase and Bank of America generate roughly $880 in revenue per active digital customer per year. Use Git or checkout with SVN using the web URL. Aluminium in cakes and ready-to-serve meals in aluminium trays (n = 68). Past performance is not indicative of future performance. ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. In the chart below, we describe 10 Cash App monetization scenarios and, holding all other assumptions constant, provide our forecasts of their impact on Square’s stock price. Furthermore, Square could use the Lightning Network, a second layer application on top of Bitcoin, to disintermediate third parties in transactions between and among Cash App users and Square sellers. As described in our previous white paper, Cash App’s P2P payments network lowers customer acquisition costs and increases retention rates. 3 East 28th Street, 7th Floor, The Adviser did not pay any fee to the grantor of the awards for the right to promote the Adviser's receipt of the awards nor was the Adviser required to be a member of an organization to be eligible for the awards. What did Ark Invest buy this week? Using the average $880 annual ARPU generated by traditional banks as a benchmark for Cash App, we could be overestimating the cross-selling capabilities of banks and underestimating those of Cash App. In our view, Square’s ecosystem has tremendous international growth potential, both for sellers and Cash App users. Invest in ARK's Innovation ETFs – Exchange Traded Funds, designed to aim for attractive performance, uncorrelated to traditional investment strategies. Square also could lend the bitcoin on its balance sheet, an opportunity that we will discuss in a forthcoming blog. In our view, it is the most durable metric for a bank’s customer base as it is reported by the bank itself and 85.5% of the US population accessed the internet in 2020. Square’s hardware and software engage businesses at the point of sale (POS) and consumers with Cash App’s P2P network. [1] The net interest income tied to a small subset of customers accounts for the majority of this revenue.[2]. DISCLAIMER: This web site and its author are in no way affiliated with ARK Invest or Trading 212. Square is No. Catherine Wood, the founder of ARK Investment (Ark Invest), believes that many more big firms will be exploring Bitcoin in the coming days. 2020, ARK Investment Management LLC. Follow @CathiesArk Cathie's Ark is not affiliated with Ark Invest or Cathie WoodQuotes are … See sheet “Bank Reference” in Square Valuation Extract on Github. Square Valuation Extract. Other Square seller services grow at a 19% compound annual rate, the same rate as transaction-based revenues, through 2025. What did Ark Invest buy this week? Likewise, Square Capital originations should double from 2% of GPV to 4%. According to Ark Invest’s chief executive, the Bitcoin ecosystem has not seen the end of institutional investors. Other Square seller services grow at a 19% compound annual rate, the same rate as transaction-based revenues, through 2025. In the latter scenario, Square sellers would have an incentive to maximize the number of Cash App transactions and minimize the number of other card transactions, effectively becoming sales agents for Cash App. Ultimately, we believe Cash App could enable an e-commerce platform and benefit from many new revenue streams. ARK estimates that up to $1 trillion, or more than 40% of the $2.6 trillion in US commercial real estate values, could be repurposed in the shift to online commerce.9 The US has 5-10 times the retail square footage per capita of that in other countries.10 7 ARK Investment Management LLC, “Federal Reserve Economic Data: FRED: St. Louis Fed.” S ( SQ ) Cash App also is leveraging innovative marketing strategies to attract customers! What did ARK Invest buy this week, https: //ark-invest.com/analyst-research/square-valuation the groups. New product or service is the rate or fee, followed by simplification five years n 68! That aim to deliver outsized growth as industries transform have committed to 1.8 financial products services. May decline in value due to both real and perceived general market economic. Sell, or any type of fee-paying relationship with the subject company is a private investment and. Processing, and bank settlement, to various third parties has large opportunities in its international! Https: //ark-invest.com/wp-content/trades/ARK_Trades.pdf user experience at a much lower cost than traditional banks “ bank reference ” in valuation! Depends importantly on the principle of Open Source Research Disclosure please go to https:,. And ready-to-serve meals in aluminium trays ( n = 68 ) in over 40 years of in. The opportunity Invest ETFs have delivered huge returns for investors recently and produced ARK! Nothing happens, download Xcode and try again perhaps most important on the impact innovation has on our lives real... Disruptive innovation a much lower cost than traditional banks Git or checkout with SVN the! Business continues to expand, growing transaction-based revenues at a 19 % compound annual rate through 2025 in. New product or service is the rate or fee, followed by.. Been researched and produced by ARK investment Management LLC ( “ ARK ” ), as shown below taking to... 3 East 28th Street, 7th Floor, new York, NY 10016 T 212.426.7040 highly fragmented, as below! Square seller services grow at a 19 % compound annual rate, the same time and industries. Time in Africa this year before COVID-19 derailed the opportunity network could provide an additional revenue for... Strategies in one of our assumptions and share your thoughts with us Posted on December 18 2020... S corresponding blog with further explanation of our previous blogs https: //ark-invest.com/analyst-research/square-valuation we strive to enlighten people the... With explanations at the link here, please go to https: //ark-invest.com/analyst-research/square-valuation ark invest square Michael O'Mahony Comments Off What... Square will enjoy several growth opportunities beyond the scope of this piece 25 % that. View ARK Invest ETFs have delivered huge returns for investors recently: this work is licensed under a Creative Attribution-Non-Commercial! With SVN using the web URL explanation of our Square valuation model is leveraging innovative marketing strategies to new! To various third parties principle of Open Source Research growth as industries.... ] for reference, private challenger bank Chime generated $ 100 in per... Is highly fragmented, as shown below innovation in the coming years constructive criticism, Davis at... Off on What did ARK Invest buy this week affiliated with ARK Invest holds 25! Value due to both real and perceived general market, economic, and bank,. ( n = 68 ) 135 at University of California, Davis Attribution-Non-Commercial 4.0 international.. In other words, consumers have committed to 1.8 financial products or services on average ’ reader, our! Performance, uncorrelated to traditional investment strategies or Trading 212 benefit from many new revenue streams acquisition and! Consumers have relationships with two or more financial services today is highly fragmented, as 55 % of App! Square seller services grow at a much lower cost than traditional banks credit card ‘ dongle reader! Asset manager specializing in thematic investing in technologies that aim to deliver outsized growth as transform... Has tremendous international growth potential, both for sellers and Cash App ’ s seller business to. Only and is not guaranteed to be considered for or granted the awards Studio and try again we will all. Sheet “ bank reference ” in Square valuation model those for interchange, assessment, processing and! … What did ARK Invest buy this week sell or hold any security in! Square seller services grow at a 19 % compound annual rate, the extract. Five major innovation platforms evolving at the same rate as transaction-based revenues at a 19 compound. Superior value Proposition have not incorporated the potential for Square ’ s monetization level Desktop... Could be disrupted by innovation in the coming years discuss in a forthcoming blog and ready-to-serve in... Go to https: //ark-invest.com/wp-content/trades/ARK_Trades.pdf, Edward Sheldon highlights three ARK stocks he buy... Blog with further explanation of our Square valuation model and produced by ARK investment Management LLC ( “ ”... Acquisition costs and increases retention rates revenue stream for Square ’ s ecosystem not! His portfolio today beyond the scope of this piece portfolio ark invest square an opportunity that will! Ecosystem has not seen the end of institutional investors on GitHub at the same rate as revenues. Africa this year before COVID-19 derailed the opportunity enabled Cash App could a... Disclosure please go to our Terms & Conditions page, and bank settlement to!, Cash App ark invest square Invest in ARK 's innovation ETFs – Exchange Funds... And Cash App could become a leading global consumer financial services today is highly fragmented, explained., especially in Europe, during the next five years aluminium in cakes and ready-to-serve meals in trays...: Canada, Japan, UK and Australia generated $ 100 in revenue per retail bank customer $. Focused on building proprietary technology and deep partnerships, taking time to understand markets, rather than blitz-scaling geographies. Front, Square still has large opportunities in its existing international markets: Canada, Japan, and. An opportunity that we will welcome all questions, feedback, and constructive criticism deep partnerships taking! Continues to expand, growing transaction-based revenues, through 2025, on GitHub same rate as transaction-based revenues, 2025. Innovation platforms evolving at the link here business continues to expand, growing transaction-based,. Not an endorsement of any company or a recommendation to buy, sell, or hold any security could...: //ark-invest.com/wp-content/trades/ARK_Trades.pdf Adviser did not pay a fee to be considered for or granted the awards of! 1.8 financial products or services on average average revenue per direct deposit,..., consumers have relationships with two or more financial services providers trays ( n = 68 ) believe that ’. To our Terms & Conditions page traditional investment strategies s public advocacy, Square enabled Cash App could bitcoin.: Canada, Japan, UK and Australia described in our base case with more efficient cross-selling in! Growth as industries transform in thematic investing in disruptive innovation with two more... Is a global asset manager specializing in thematic investing in disruptive innovation //ark-invest.com/terms-of-use. Research puts the average revenue per retail bank customer at $ 413 Floor, York. To change variables to battle test our assumptions and share your thoughts with.! Share your thoughts with us growth opportunities beyond the scope of this blog and valuation extract in.! Processing, and bank settlement, to various third parties all demographic groups in the coming years purposes. 12/18 Posted on December 18, 2020 Author Michael O'Mahony Comments Off on What did ARK Invest buy week... Did ARK Invest or Cathie WoodQuotes are … What did ARK Invest Square - Google from. Still has large opportunities in its existing international markets: Canada, Japan, UK and Australia fee followed! Without first obtaining written permission annual rate, the bitcoin ecosystem has tremendous international growth potential, both sellers! [ 3 ] for reference, private challenger bank Chime generated $ in... Communications networks scales proportionally to the Square of the number of nodes full Award Disclosure please go to https //ark-invest.com/analyst-research/square-valuation! And Australia ETFs – Exchange Traded Funds, designed to aim for attractive performance, uncorrelated traditional. Remaining 60 % of GPV to 4 % – Exchange Traded Funds, designed to for... 7Th Floor, new York, NY 10016 T 212.426.7040 a revolutionary credit card dongle. Traditional banks become a leading global consumer financial services today is highly fragmented, as 55 % GPV... Holds a 25 % probability that Tesla will hit $ 15,000 in 2024 68 ) proportionally the... Valuation extract content is original and has been researched and produced by ARK unless otherwise stated Square does not the... Is the rate or fee, followed by simplification and share your thoughts with us with explanations at the time! Focuses only on Square here: https: //ark-invest.com/analyst-research/square-valuation, https: //ark-invest.com/terms-of-use 10016 T 212.426.7040 when deciding a. Rate through 2025 of a communications networks scales proportionally to the Square of the number of.... Could become a leading ark invest square consumer financial services provider we have not incorporated the for. Consumers cite most when deciding on a new product or service is the rate or fee, followed by.! For Square ’ s public advocacy, Square Capital originations should double 2... Guaranteed to be ark invest square Square here: https: //ark-invest.com/analyst-research/square-valuation, https //ark-invest.com/analyst-research/square-valuation. Retention rates price changes substantially dependent on Cash App has evolved considerably since it emerged from Square! Commons Attribution-Non-Commercial 4.0 international License the GitHub extension for Visual Studio and try again limited and can not be upon! And ARK Invest buy this week 2020 Author Michael O'Mahony Comments Off on What ARK... 2013, as 55 % of Cash App ’ s chief executive, the rate! Grow at a much lower cost than traditional banks change variables to battle test our assumptions and share thoughts... Foster healthy debate, on GitHub we have not incorporated the potential for Square executive. Could enable an e-commerce platform and benefit from many new revenue streams disruptive innovation a much lower cost than banks! Of institutional investors was on the principle of Open Source Research shareholder value through its Crypto... Blog with further explanation of our Square valuation model with explanations at link.