Square’s Great Success

Last night, Square announced its purchase of buy now, pay later (BNPL) firm Afterpay—the all-stock deal is worth $29B.

Afterpay is Square’s largest acquisition ever. It’s also the biggest M&A deal in the history of Australian capital markets. 🇦🇺 💸

The announcement came hours after we covered BNPL’s explosive pandemic growth in the Weekend Rip. 💥 For those of you who missed out, here’s a recap:

BNPL companies like Afterpay, Klarna, and Affirm offer users the option to make interest-free installment payments on purchases. The companies make money by charging the vendor a portion of the transaction.

Afterpay’s 16M users are an immediate value-add to Square’s business, both on the consumer and sell side. BNPL users tend to be younger and more diverse, providing audience overlap to Square’s consumer-facing Cash App. 👌

The deal was announced just hours before Square’s quarterly earnings. Shares of $SQ rose 10.22% today and $AFTPY stock rose 35.1%. $AFRM, another BNPL company, increased 14.9% in sympathy with the acquisition news.

Speaking of Square… the company mentions Bitcoin 120 times in its latest earnings report. That’s because Square’s consumer-facing app Cash App has become an unlikely place to buy and sell crypto. 🙊 

In its Q2 earnings, Square reported that Cash App users bought $2.72B worth of $BTC.X in Q2 2021. Thanks to those figures, Square’s Bitcoin segment booked $55M in profit—a 3x increase YoY. 

Aside from offering crypto purchases, Square has more than $281M in Bitcoin. With that being said, Square’s Bitcoin profits were almost entirely offset by $45M in impairment costs related to its Bitcoin treasury.

Square CEO Jack Dorsey is a Bitcoin permabull, often underscoring the importance of the blockchain. Dorsey’s company is developing a hardware crypto wallet, building a DeFi platform, and plans to offer Bitcoin payments as an option to vendors.

Apart from Bitcoin, Square observed $42.8B in gross payment volume (the total amount all of their vendors booked in transactions.) The company’s total net revenue without Bitcoin was $1.96B. Square beat on analyst EPS estimates, but missed on revenue. 

Google announced its much-anticipated new flagship phone today. 🙌 The company confirmed the Pixel 6 and Pixel 6 Pro, but skimped on the details. 

These two phones will be controversial. The design is kind of weird, but the biggest change might be to the lineup itself. Pixel has been positioned as a niche mid-range phone since its inception. Google’s new phones, however, will run on a custom chip called Tensor, which should significantly boost performance. 

That almost guarantees these phones will be more expensive, but reinforces Google’s comments about “deep tech investments.” According to Cnet, rumors about the new Pixel phones’ faster screen refresh-rates, multiple cameras, and other goodies might just make it worth the extra dough. 💁‍♀️

Tensor follows in the footsteps of Apple and Samsung, which no longer exclusively rely on Qualcomm’s mobile Snapdragon CPUs. Nowadays, Big Tech is bringing their own chip to everything from mobile phones to laptops. 

$GOOG gained 0.57% today.

Robinhood released some deets on its new IPO Access feature (and how the feature helped $HOOD’s own IPO). IPO Access offers Robinhood users access to select IPOs at their offering price. 📈

According to Markets Insider, Robinhood sold $HOOD shares to 301,573 users ahead of its sucky market debut last week. That figure represents just 1.3% of its users.

That number might feel small, but it’s IPO Access’ biggest success thus far. F45 Training, another recent IPO Access company, got 78,250 customers to sign up for stock. Duolingo only got 12,602 orders.

One thing is for certain: investors had mixed feelings about Robinhood and its controversial IPO, which could explain why most users didn’t participate in the debut. 🤷

However, Robinhood’s luck could change real fast as retail and institutional investors buy this dip. Cathie Wood is among the buyers—Wood bought $45M of Robinhood stock for her flagship $ARKK fund.

$HOOD increased 7.2% today.

The long-awaited bipartisan infrastructure bill is coming to a vote. The bill will likely pass in a vote early next week and then head to the house.

The 2,702-page bill is a beefy one. 😪 A large portion of the infrastructure bill will be dedicated to traditional infrastructure, like roads, bridges, rails, pipes, power, etc. 

However, the bill also addresses aspects of modern infrastructure: EV charging stations, wildlife crossing structures, climate change issues, expanded healthcare, and broadband. 

Some private sector players will be big winners. Airlines, materials companies, internet service providers, and logistics/shipping companies are just a few that stand to benefit from the bill.