Another day, another Bitcoin purchase by a major corporation! This time by Square, Inc. The news was revealed following the announcement of their fourth quarter results, where the company disclosed its purchase of an additional $170 Million Bitcoin. Clearly the company loves Bitcoin, considering this is an additional purchase following their $50 million buy not that long ago. Unfortunately, the stock dropped about 8% following their earnings announcement. Are you worried? For this article, we ask the question: Time to buy the dip on Square Stock?
Square 10K Earnings Report Summary
First, to answer if we should buy the dip, let’s check out their financials.
Square, Inc. reported their full year earnings yesterday.
Check out the summary here:
From this earnings report, it is pretty clear how fast the company is growing. We have watched this stock grow for years, and each earnings report confirms its consistent growth.
As you can see above, their total net revenue increased substantially, from $4.7B to $9.5B this year.
That is some incredible growth, especially considering the devastating effect of the COVID19 pandemic on the economy.
Kudos to Square.
However, as you can see here, their net income decreased. Not too worried.
It will bounce back, right?
Square Buys Bitcoin
Bitcoin continues to make headlines, and the HODLers are loving it. #Gainz
Elon Musk’s announcement of purchasing $1.5 Billion in Bitcoin in Early February probably shocked the world. One might think,
“Such an immense amount of company cash…is buying a cryptocurrency really a smart move that benefits shareholders?”
Elon Musk thinks so. And he’s a pretty smart guy.
Square execs apparently agree.
According to CNBC:
The company said it purchased approximately 3,318 bitcoins, expanding on its October 2020 buy of 4,709. Square said it represents about 5% of the company’s total assets as of the end of 2020.
“The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis,” the company said in its earnings release. Its CEO, Jack Dorsey, as also been an advocate of the digital currency.
I find this to be very interesting, because it may be the start of a new trend.
Yes, major corporations buying crypto. Yes, crypto, not just Bitcoin.
Piercing the unprecedented barrier of buying a cryptocurrency, a non central bank controlled currency.
This would be unthinkable even a few years ago.
In retrospect, this was all predicted by Satoshi and the early cryptocurrency adopters.
We are level 100,000 bullish on crypto, and companies that invest and adopt them. And it’s pretty clear we are still in the very early stages.
Square Stock Prediction
As of February 24, 2021, Square Stock ended the day at $237.32/share, down 7.5% on the day, with a market cap of $107 Billion USD.
What does the daily chart say?
As you can see here, the chart is ridiculously bullish. Strong uptrend, no trend breaks. Very bullish.
Square is approaching a 1000% gain from the March 2020 Bear Market lows. Also pretty bullish.
However, there are two competing forces here. The 2020 bull market support level has been hit at the same time as the daily MACD is descending.
Just looking at the chart, every descending MACD crossover is somewhat bearish for the stock.
In reality, charts are just Rorschach tests. What does this Rohrshack test say to you?
To us, the dump just looks like a garden variety test to support levels, nothing major. There would need to be a significant liquidity event to break this upward trendline.
Maybe it goes a little lower, but, in our opinion, this is just a great stock to hold forever (not financial advice). And the consistent purchase of Bitcoin shows that the company is willing to hop on exponential trends, in the same way that their product itself (ecommerce payment processing is yuge).
Most likely, this will continue to move higher with cryptos and the market in general, excluding a financial shock/liquidity event.
Square to the moon?
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