I just sold all of my SQ. I bought it at its peak around $88. Why I am selling? I have only encountered Square only a few times since I owned the stock last year. Everyone I know, including my hair dresser, Cello teacher, and mobile car detailer use Venmo. A recent news alert that SQ app download growth outpace Venmo. Is it possible that people are downloading the app but not really using it? Does the market know something about SQ that we are missing?
Lily
Lily,
It seems like people’s experience with Venmo & SQ depends A LOT on things like age, location, and lifestyle. I’ve been seeing SQ all over the place since 2016. Disclosure: I’m 38 and live in a rural college town in the southern US. I own both SQ and PYPL.
In my experience, Venmo and SQ serve very different niches, but perhaps things are changing. To me, when I hear Venmo, I think of social media (friends). It’s an app I downloaded to send money to/from friends. When I hear SQ, I think small businesses and vendors (strangers). I’ve never downloaded any SQ app, but I’ve used it a lot more than Venmo as a consumer.
SQ has taken over small businesses that used to be “cash only”. For example, most food trucks, the farmer’s market, local craft breweries, the wine bar, independent coffee shops, and yoga studio. And recently on a trip to SF (polar opposite of where I live): a hole-in-the-wall Ethiopian restaurant, and boba tea shop.
Also, in my experience, it’s easy for me to order a to-go sandwich from a food truck and not put anything, or just a few coins, in the tip jar. However, psychologically, it’s nearly impossible for me to click “no tip” when the vendor swipes my card with SQ and hands me the iPad. I suspect that many vendors who were cash-only for years because of the 3% credit card fee are realizing that the increase in tips more than makes up for the difference.
In contrast, I’ve only used Venmo to send/receive money with friends (sometimes for a business service), as an alternative to writing a check or paying cash. For example, to pay a friend who took our baby photos this spring. To reimburse a friend who bought tickets. To put money in my wife’s account because she didn’t have paid maternity leave. I don’t think I’ve ever Venmo’ed anyone money who I wasn’t at least FB friends with.
I suspect that a college student who doesn’t frequent the aforementioned businesses wouldn’t encounter SQ much. But they’ll likely use Venmo all the time – to pay rent, to split grocery bills with roommates, etc. Similarly, it seems like many older people haven’t jumped onto the Venmo train yet.
Things I haven’t looked into about SQ vs. Venmo, but am curious about: Which one of these is / will dominate the landlord market? How will they expand globally in the coming years? Will SQ have success moving into banking? Will the new Venmo card be popular, especially among young people? Will either of these encroach into and/or take over (what I perceive to be) the other’s niche? Political donations in 2020 will be at an all-time high; will either one of these capitalize off that market? Finally, unlike a huge corporation switching from Okta, MdB, or ZS to a competitor, it’s relatively easy for a small business or landlord to switch from SQ to/from Venmo. How often is this happening, and in what direction? This is perhaps the most important question on this list.
As I said, I have both SQ and PYPL. After thinking I was “too late” to Square in early 2018 (doh!), I initially bought in at $94 (so I feel your pain), but I’ve added enough positions since then that I’m about even. No plans to sell either soon. But I’ll be paying more attention to the questions in my previous paragraph, as a way to gauge how much of a “disruptor” they continue to be.