Historically, Square has focused on building proprietary technology and deep partnerships, taking time to understand markets, rather than blitz-scaling across geographies. As a result, we believe that Square should be able to double its penetration of the US general purpose card purchase volume from 2.7% in 2019 to 5.5%, growing transaction-based revenues at a 19% annual rate during the next five years. In our view, meeting the three challenges mentioned above, Cash App will increase its average revenue per user by (ARPU) 49% at a compound annual rate during the next five years, from $25 last year to $260 in 2025. A big reason the ARK Fintech Innovation ETF (NYSE: ARKF) is higher by 71.32% this year is the growth of digital wallets, such as PayPal's (NASDAQ: PYPL) Venmo and Square… All content is original and has been researched and produced by ARK Investment Management LLC (“ARK”) unless otherwise stated herein. Professional money management is not suitable for all investors. DISCLAIMER: This web site and its author are in no way affiliated with ARK Invest or Trading 212. Shorter term, while COVID-19 shut down many originations, the Payroll Protection Plan introduced thousands of new sellers to Square’s lending capabilities. ARK Invest ETFs have delivered huge returns for investors recently. The information provided here is intended for educational purposes only and is not guaranteed to be accurate. Even if primary and secondary Cash App users were to monetize at only a 10% rate, Square could appreciate at a 10% annual rate to roughly $250 per share in 2025.[4]. 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. In emerging markets, Cash App could leverage bitcoin, as explained below. View Ark Invest SQUARE - Google Docs.pdf from ECN 135 at University of California, Davis. Ark invest square analysis Figure 4. For a list of all purchases and sales made by ARK for client accounts during the past year that could be considered by the SEC as recommendations, click here. You may not use the material for commercial purposes without first obtaining written permission. The firm is rooted in over 40 years of experience in investing in technologies that aim to deliver outsized growth as industries transform. Feel free to change variables to battle test our assumptions and share your thoughts with us. Modifiable variables are marked in red. Moreover, to avoid unpleasant interactions months after splitting the costs after a night on the town, family and friends can lure users back to Venmo, Cash App, and other P2P platforms when requesting long delayed repayments. 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. An ARK Invest spokesperson wouldn’t elaborate, but Ms. Wood told an interviewer last month that she expects to nearly triple … 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. The author accepts no responsibility for financial decisions made using the information provided by … While it has lost international sellers, we believe Square has substantial runway in the US to offer a cost effective and convenient way not only to accept payments but also to help entrepreneurs manage their businesses, especially given its newly acquired Industrial Loan Company (ILC) bank charter. 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. 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. Cash App could achieve even higher ARPUs than in our base case with more efficient cross-selling than in traditional banks. [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. Published 30/9/2020. Square does not monetize the remaining 60% of Cash App’s MAUs. Square’s seller business continues to expand, growing transaction-based revenues at a 19% annual rate through 2025. We also assume that Cash App’s estimated 75 million monthly active users break down into the three groups in 2025: 20% primary, 20% secondary, and 60% unmonetized, resulting in an average ARPU of $260. The reason consumers cite most when deciding on a new product or service is the rate or fee, followed by simplification. Ultimately, we believe Cash App could enable an e-commerce platform and benefit from many new revenue streams. There is no guarantee that ARK's objectives will be achieved. The five actively managed ETFs provided by ARK cover innovation, autonomous technology and … Past performance is not indicative of future performance. In 2025, Cash App monetizes another 20% of its estimated 75 million MAUs, its “secondary” MAUs, at half that rate. But traditional car makers are catching up. ARK Invest is a private investment start-up and founded on the principle of Open Source Research. Here, Edward Sheldon highlights three ARK stocks he'd buy for his portfolio today. That said, Square still has large opportunities in its existing international markets: Canada, Japan, UK and Australia. 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. [8] Before launching officially in Europe, however, Cash App probably will use Verse, a P2P payment startup Square acquired earlier this year to increase its understanding of European markets. ARK's statements are not an endorsement of any company or a recommendation to buy,sell, or hold any security. These companies such as Tesla, Square, and Illumina are just some of the companies form the backbone of Ark Invest’s different funds. This material is for informational purposes only and does not constitute, either explicitly or implicitly, any provision of services or products by ARK. ARK Investment Management LLC focuses solely on investing in disruptive innovation. Among them are the four described below. The Adviser did not pay a fee to be considered for or granted the awards. In our view, Square’s ecosystem has tremendous international growth potential, both for sellers and Cash App users. ARK’s statements are not an endorsement of any company or a recommendation to buy, sell or hold any security. 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. I recently discovered Cathie Wood and ARK Invest and have come away very impressed with their ETFs. Square also could incentivize them to become Cash App sales agents with access to an advertising platform and to millions of consumers with every day discounts via Boosts. 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. Current and Historical Performance Performance for ARK Innovation ETF on Yahoo Finance. As another example of companies struggling to build out front-end relationships with both consumers and businesses, JP Morgan recently shut down a payment network that attempted to link consumers and businesses directly. If nothing happens, download GitHub Desktop and try again. 12/18 Posted on December 18, 2020 December 18, 2020 Author Michael O'Mahony Comments Off on What did Ark Invest buy this week? Ark Invest’s Cathie Wood Says Big Tech Firms Exploring Bitcoin Ark Invest founder and CEO Cathie Wood says she is expecting a new wave of institutional investors to put Bitcoin on their balance sheets. Square’s Seller Business: A Superior Value Proposition. T 212.426.7040. ARK is a global asset manager specializing in thematic investing in disruptive innovation. Forecasts are inherently limited and cannot be relied upon. To foster healthy debate, we have published an extract of our Square valuation model.