Driven by the popularity of Cash App, Square's stock is up 28% in the past month and 166% in the past year; Cash App saw revenue double to $325M in Q2 2020
Users have flocked to Cash App, which made it easy for people to accept stimulus checks and unemployment benefits Tweets: @patrickmcgee_ , @unhedgedchatter , and @rabois Tweets: Patrick McGee / @patrickmcgee_ : >Square lost roughly $117 million in the first six months of 2020, yet its overall market capitalization exceeds that of Goldman Sachs Group Inc. https://www.wsj.com/... via @Instapaper @unhedgedchatter : “To promote Cash App and their new single, ‘WAP,’ rappers Cardi B and Megan Thee Stallion gave away $1 million to fans who messaged them on Twitter with their Cash App usernames, called ‘cashtags.’” $SQ $TWTR https://www.wsj.com/... Keith Rabois / @rabois : CashApp worth $40 B: https://www.wsj.com/...
Context & Ripple Effects
Cash App is no longer a side project inside Square: the corpus traces it from 7M customers using the app in December 2017 to 24M monthly actives by Q4 2019, and now to revenue doubling to $325M in Q2 2020. The catalyst this quarter is government money — users routed stimulus checks and unemployment benefits through the app.
First-order effects
- Square's market capitalization now exceeds Goldman Sachs' despite a roughly $117M loss in the first six months of 2020 — investors are pricing the consumer app, not the payments hardware business.
- The quarter's optics lean heavily on pass-through volume: alongside the $325M Cash App revenue, the prior Q2 report showed $875M in bitcoin revenue, which inflates top-line growth far more than gross profit.
Second-order effects
- Celebrity distribution is now a proven acquisition channel: Cardi B and Megan Thee Stallion gave away $1M via Cash App cashtags to promote 'WAP', and Keith Rabois' $40B valuation for Cash App signals how much of Square's equity story rests on that growth engine.
- With the next print already showing Q3 revenue of $3.03B and Cash App up 174%, rivals in consumer finance face a competitor whose user base compounds through stimulus flows and viral giveaways rather than paid marketing.
Third-order effects
- If the pattern holds, fintech valuation detaches from current profitability — Square trades above Goldman Sachs on user momentum alone, rewarding consumer-app scale over banking-sector balance sheets.
- The bitcoin dependency cuts both ways: the corpus later shows $45M in impairment losses on Square's own bitcoin holdings in 2021, suggesting the same crypto tailwind inflating revenue can swing against gross results when prices fall.
The trend: Consumer payment apps are being re-rated as stimulus-and-crypto-amplified growth platforms, pulling valuations away from traditional financial benchmarks like Goldman Sachs.