The recent rumor linking up Amazon (AMZN) with JP Morgan (JPM) to produce an Amazon branded bank account is not all that shocking.
Jeff Bezos seems to cause a stir with every finger he lifts.
But if I had to choose one man that will revolutionize the digital payment industry and banking it is not Jeff, but Square (CEO) Jack Dorsey.
Jack is the logical choice. Investors only need to see the proof in the pudding.
Without much hype, Jack Dorsey is in the midst of applying for a bank charter in the state of Utah.
This is in the form of an ILC (Industrial Loan Charter), only available in select states, which allows non-financial firms to enter the banking sector without any regulation or oversight by the Federal Reserve.
If you wondered why so many of your credit cards come for the Beehive State this is why.
This loophole would allow fintech companies to become fully-fledged financial players. ILC's are not subject to state licensing rules, which most legitimate banks must adhere to.
This is occurring during a more exaggerated backdrop of big tech scarcely being regulated at all. Small fines and slaps on the wrist don't meaningfully count.
Utah boasts over half of the ILC's currently in operation. The original purpose of the Utah ILC was to offer loans to blue collared workers around 1905-1910.
Other fintech companies employing this tactic is Sofi which Anthony Noto just took over and is part of the Softbank Vision Fund. Noto was the former COO of Twitter (TWTR) and was largely tabbed as the guy who turned around the ship there.
Lamentably, Anthony Noto left Twitter because of his aspirations to become a CEO, which was currently filled by Jack Dorsey. Yes, the same Jack Dorsey who is the CEO at Square.
Effectively, Anthony Noto left Twitter to duke it out with Jack Dorsey's other company Square. This has also given more credibility to Sarah Friar, CFO of Square, who just joined the Walmart (WMT) Board of Directors and is a true high flier.
It is assumed that with Noto's departure, Sarah Friar will pick up the slack at Square when Jack is putting Twitter's house in order across the street.
Sadly, Jack can't physically be in two places at one time. And an algorithm of himself has not been created yet.
Sarah Friar could be the next to jettison for a CEO position elsewhere as gaining a job credential from a Jack Dorsey company is digital crypto-gold.
At the micro level, Square is summed up by one number, GPV (Gross Payment Volume). It's the only metric investors look for. GPV on Square's platform surpassed $65 billion in 2017 and there no chance the upward trend will reverse in 2018.
Square (SQ) braggadocio stems from its brilliant pipeline of innovation.
The greatest benefit of being led by a super star visionary like Jack Dorsey is the high-quality offerings marinating in the pipeline.
Suffice it to say the quality is higher than relative to industry competitors allowing investors to double down on the Jack premium.
This was the same concept with the Steve Jobs premium at Apple (AAPL).
Once boards christen custodial type CEO's like Steve Ballmer and Tim Cook who are interested in shepherding the company instead of revolutionizing it, investors become disheartened for the lack of hyper-acceleration. Custodial CEO's tend to be reactive instead of proactive which is a self-defeating strategy.
Simply put, consumers love great products.
Investors are attracted to the fact that heavy hitters haven't adopted Square's services yet and Square is experiencing whirlwind momentum as they move upstream.
Up to this point, Square's success has been created on the back of small business growth. The momentum is a function of three points: product quality, distribution quality, and support services quality.
Over 80% of large merchants migrate to Square themselves. The easy to use platform directs these Fortune 500 companies effectively. They visit the website once, pay for the service they need, and do not need to communicate with anyone.
This vindicates the product existence and similar to Tesla (TSLA), they don't need physical dealers to sell. Customers find them and not the other way around.
Square Cash is fast becoming the millennial way to pay for things, which is Bearish for PayPal (PYPL). It's the easiest way to digitally send money. Cash is available for both personal and business use.
The Square Cash App is now available for trading Bitcoin (BTC) except for users in New York, Georgia, Hawaii, and Wyoming.
Even though the Bitcoin announcement will not drive the bulk of its business, the Bitcoin disclosure is a thinly veiled advertisement for its peers representing innovation and hyper-pace of transformation at Square.
This is the gumption that attracts top level engineers to Jack Dorsey's enterprises.
Other products that customers notice in stores is Square Register, which is a state of the art POS (Point of Sales) system. Also, there is Square Stand which is the iPad POS system that swivels around to customers from the cashier.
Square Capital is making inroads too with loan growth up 23% QOQ. Square capital provides business loans to small businesses. This is the part of the business that directly competes with SoFi.
On a financial level total net revenue is robust at $616 million QOQ, up 36% YOY and the 2018 calendar year will be even better for Square.
Square expect to offer expanding financial services for both sides of the transaction. The only limit to growth is its imagination, as is evident with the roll-out of new products almost every quarter.
Highlighting the extreme growth are invoices, virtual terminal, and e-commerce API payments, all commanding higher margins.
Subscription and service revenue rose 96% YOY. The ability for outsized growth of this scale through rapid product innovation and the chance to cross-sell into an embedded Square customer is essentially the cloudification seen in all tech companies these days.
In 2018, expect total net revenue to guide between $2.82 billion to $2.88 billion and represents a 32% YOY growth respectively.
Jack Dorsey is not a CEO to bet against and when a 96% bump in service and subscription revenue cannot even break into the top 3 reasons to buy this stock, investors know they have a gem on its hands.
