The ARK Fintech Innovation ETF (NYSEARCA: ARKF) devotes almost 12% of its own weight to Square (NYSE: SQ), the biggest burden to the climbing fintech celebrity among all ETFs and that vulnerability is becoming more important and rewarding to investors.
ARKF’s Square vulnerability is significant on several levels, not the least of which is, well, clients really the provider. That’s a rarity in regards to financial institutions since most people just don’t enjoy their banks.
“In the united states, most clients don’t enjoy their banks. In a poll position the 100 hottest businesses by client satisfaction, banks obtained three of the lowest ten locations. According to another poll, 71% of Millennials would like to see their dentists compared to participate with their banks,” writes ARK analyst Max Friedrich.
More Reasons to Enjoy Square
Payments are going digital with quite a few start-ups seeing venture capital seed money to help alleviate online purchases. According to the research firm Pitchbook, statistics proves that investors place $18.5 billion to the payment processing industry in 2018–an increase of five times the previous year.
Other reasons to be bullish on Square include the company’s penetration small business financing in the aftermath of this Coronavirus, but that only scratches the surface of chance with the business and its Money App digital wallet.
“Square’s Cash App, seemingly the fastest-growing consumer financial product in the US, has taken a different tack, offering products for free and building a brand that consumers like,” notes Friedrich. “One of recent advertising initiatives, it delivered a restricted number of consumers ‘interesting boxes’ using Cash App branded socks and decals – goods typically related to sports clubs or audio classes, not banks.”
Earning ARKF’s Square vulnerability even more persuasive is that Money App and electronic wallets, generally speaking, aren’t being suitably factored into fintech discuss rates. Nor is fresh value as it regards Square.
“While investors are beginning to understand and acknowledge the commercial potential of Cash App, in our view they are underestimating the value of a consumer finance brand that customers trust and want to support,” based on Friedrich.
Fintech enables financial companies to leverage cutting edge technology to decrease expenses, enhance decision making and hazard controls, eliminate middlemen, and improve customer experiences. A thematic strategy includes investments which stand to profit from structural change driven by technological and demographic changes.
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The predictions and opinions expressed herein are only those of Tom Lydon, also may not really come to pass. Information on this website shouldn’t be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any item.