Key Points
- Times of market turmoil can end up being some of the best buying opportunities.
- The perfect example of this is fintech leader Square, whose stock took a huge hit during the onset of the pandemic in 2020.
- As a thriving two-sided payments ecosystem, Square has many favorable characteristics investors should be excited about.
Is inflation here to stay? When is the Fed going to start raising interest rates? Is the world ever going to move past the pandemic? If you’re an investor, I’m certain these questions have been on your mind. And they probably have you worried about a potential market crash in the near term.
You can take advantage of the stock market’s volatility, however, to bolster your own portfolio by buying shares of great companies that are on sale. Here’s why Square (NYSE:SQ) is one such opportunity right now.
A brief history lesson
From late February through late March of 2020, when strict lockdown measures were first put in place here in the U.S., the S&P 500 dropped 31% and Square fell 54%. Major economic and health worries ripped through markets, causing even the best of companies to shed massive amounts of value along with the overall market.
Since then, Square’s stock price has skyrocketed more than 500%. Investors who didn’t panic and held onto — or even added to — their holdings were handsomely rewarded. In these situations, the key is to focus on the company’s fundamentals and not on what the rest of the market is doing. Square’s revenue grew 44% in the first quarter of 2020 and 64% in the second, so the business was actually booming when the market sold off.
But keeping your cool and staying calm is very difficult to do in practice because it requires you to tune out others’ actions and opinions. The financial benefit of staying the course, though, is strikingly clear.
It doesn’t even have to be an extreme market crash like the one we experienced more than 18 months ago. Just over the past month, Square is down 11%, presenting investors with another potentially lucrative opportunity to acquire shares of this flourishing fintech.
User-friendly financial services
Square offers a number of financial tools for both merchants and consumers. Sellers have a full suite of 30 different software, hardware, and financial-services features to choose from to help run their businesses. And with Cash App, Square lets customers send and spend money, set up direct deposit, and invest in stocks and Bitcoin. Co-founder and CEO Jack Dorsey identified a serious market need that the big banks weren’t addressing, and that’s why his company now carries a market capitalization of $110 billion.
Full story on Fool.com
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