Deep Dive: Matt Cochrane Discusses Square and Afterpay
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Show Notes
It was great to have longtime show guest Matt Cochrane back on to discuss the huge fintech merger between Square and Afterpay. Matt focuses on financials/fintech/payments for his research with 7investing, and he has been following Square for many years.
Here are some questions we asked him:
Has your investment thesis changed at all for Square since we last spoke in December of 2020?
Do you still like the seller ecosystem side of the business? If you were buying just the seller business how much would you be willing to pay?
Has the company done anything recently to further tie the 2 ecosystems together?
Gross profit per Cash App user has gone up 2.5x over the past two years. Why did that happen? How can they grow that number over the next 3 – 5 years?
Thoughts on Bitcoin as a part of the business
How do you think Tidal fits into the company? Were you for or against that acquisition?
Can you explain Afterpay’s business model? What makes them different than the typical BNPL solution?
The IR presentation talks about integrating Afterpay into Square’s merchant and Cash App ecosystems. What sort of benefit can that bring?
Afterpay has a high level of accounts receivable that seems to be a feature of the BNPL model. Does that present a concern to the combined companies ability to generate cash flow?
With the addition of Afterpay and Square Capital, how should investors in Square be thinking about the credit/loan risks it is taking? Is it an advantage when evaluating credit worthiness?
What needs to go right for Square to get a good return on this $29 billion investment?
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Disclosure: The author and podcast guests are not your financial advisors. Ryan Henderson and Brett Schafer are general partners and portfolio managers at Arch Capital. Clients of Arch Capital may hold securities discussed on this show.