Square claims less than 3.0% of the market
At its investor meeting last month, Square (SQ) portrayed itself as a company in the early stages of a long-term growth cycle. One thing that emerged from the investor meeting is that Square views its currently tiny share of the US (SPY) payments market as a position of strength rather than weakness.
As analyst Scott Devitt of Stifel pointed out, Square claims that its share of the US payments market is less than 3.0%, which shows it still has a long growth runway ahead. The US payments market is a $26.0 billion revenue opportunity. Square is battling PayPal (PYPL) and a host of other rivals for control of this market.
A $60 billion addressable market
But payment is only one of Square’s operations. The company also has operating footprints in e-commerce, software, food delivery, and small business loans. Thus, Square estimates that its total addressable market is worth more than $60.0 billion.
In the business of supplying small loans to merchants, Square competes with PayPal, Amazon (AMZN), and LendingClub (LC). The credit operation could be a potential pillar of Square’s business given the strong demand for alternative credit. In the food delivery market, Square competes with Yelp (YELP).
Square projects 25% long-term growth
Square forecasts that its revenue will grow at a rate of 20.0%–25.0% over the long term, which will likely be supported by the company’s international expansion. Square’s revenue rose 21.7% to $461.6 million in 1Q17 as shown in the above chart.