Mobile Payments Titan Square Losing Ground on Stock Front?

It’s not hard to see where Square was a big deal for a long time. This is the company that got a lot of businesses interested in mobile payments, and gave them the tools to take said payments for the first time. The market rewarded Square with massive gains, and the share price stands at $90.95 as of this writing, up from $9 per share in November 2015. Yet there are new reports that suggest that Square stock may not be so attractive going forward.

The gains were massive for one big reason: Square was effectively at the forefront of the mobile payments revolution. Square was actually celebrating the fifth anniversary of its Square Reader just two months after Apple launched Apple Pay.

Square didn’t just launch the Reader and let it run its course, either; Square kept innovating, and innovating to the point where it was a complete ecosystem with plenty of users before Apple Pay broke the floodgates on smartphone-based systems. That meant huge jumps in revenue for Square, who in many ways had first-mover advantage for years.

Here’s the problem, though, as Square approaches $100 per share: revenue growth is no longer assured. Square’s first-mover advantage is gone, and it’s fighting off a whole raft of competitors, many of whom are original equipment manufacturers (OEMs) offering mobile payments services to their own particular user base. This is going to be a huge drag on Square’s ability to get new users into the fold, which means revenue growth is no longer the surety it once was.

This is prompting some to note that the “risk-reward ratio” of Square’s stock is looking a little less like the growth wave of the future and more like one of many in a steadily-growing field. It’s not going to be able to pull a lot of users out of their current solution, and unless it can put out a very compelling reason to jump ship, it’s pretty much stuck where it is.

The question ultimately becomes simple: will investors see Square as an established firm representing a great opportunity, or a growth stock that’s had its growth and will simply hold its ground? Only time will tell, but Square is still a name to conjure with in mobile payments.