Despite its stock getting hammered like fintech stocks have in 2022, block (SQ 5.70%) could be poised for considerable upside over the long term. In this clip from “3 Minute Stocks Updates” on Motley Fool Live, recorded on June 22Motley Fool contributor Brian Withers discusses how Block has expanded its addressable market by building an ever-growing ecosystem.
Brian Whiters: The other thing that’s happened over this long period of time is the addressable market. As they’ve expanded the ecosystem, they’ve also expanded the addressable market as well as the market has just become larger over time as well. And so, Cash App, here on the left, has grown to a $70 billion market, where the Square app for the seller side has gone to $120 billion. Pretty nice. It’s always nice to see companies addressing a larger, expandable, addressable market over time. I thought this was a really neat chart, in the Investor Day, they talked about an ecosystem of ecosystems. You can see Square here with all of the different applications that it has around the Square app and all the connections that are made inside the Square app. Well, there’s also connections to the Cash App between Square and Cash App as well as AfterPay, certainly impacts both of those. Then, you can see their fringe things also have touch points into these systems. I love to see the density of that Square app and the connections. You saw the Cash App over time, building its ecosystem and becoming larger over time and creating more connections. To me, the more connections, the more sticky this is, it gives the shareholders of Square, I think, between the growing ecosystem and the growing addressable market, some of Block’s best days may still be ahead.