-$180.31 -76.39%
Neil's avatar
$35.1m follower assets
Block Stock (SQ)
In this video, I will be going over the recent downgrades that Block has gotten, especially from longtime bull Dan Dolev from Mizuho. While I do share some of his concerns, such as with Jack Dorsey's fixation on Bitcoin, I do think that Block has come out of the pandemic much stronger and, with shares down close to 80% since last year, now is probably a bad time to turn bearish.
Cameron McFarlane's avatar
$16.7m follower assets
Took Profits on $SQ This Morning
Sold completely out of $SQ. Price action hasn’t been great and continues to make 52 week lows. Similar to what I have done with $NVDA, hold the cash on the sidelines and wait for better price action
Could Zelle replace Venmo and Cash App? How about Mastercard and Visa?
I'm noticing that both the political and investment arena of the US are getting concerned about the excess payment processing fees that $MA and $V have been taking advantage of for many years.

As Mastercard and Visa see their shares hit a 52-week low, Wall St. is expecting that antitrust scrutiny could hinder the pricing power that these payment processing companies have over merchants.

While some might think that $PYPL or $SQ could capitalize on the growing antitrust concerns with their payment processing devices, there are some things to think about.

First, how much does each firm charge merchants for transactions?

Square charges 2.6% + $0.10
PayPal charges from 1.9% to 3.5% and $0.05 to $0.49 depending on the PayPal product that the merchant is using.
Visa charges 1.15% + $0.05 to 2.4% + $0.10
Mastercard charges 1.15% + $0.05 to 2.50% + $0.10

Meanwhile, Zelle charges banks $0.45 to $0.90 per transaction. It's free for users in the meantime, and the network moves more money than Venom and Cash App combined. However, Zelle users are limited to sending up to $15,000 per month. Meanwhile, users of Venmo can send up to $60,000 per month, and users of Cash App can send up to $30,000 per month.

Zelle was made to replace the need for paper checks for doing transactions. Smaller service-oriented businesses have been using Zelle because of the lack of payment processing fees and instant settlement.

Sure, most businesses don't normally take checks. But, I do think that with the lack of fees and the resources that the big banks have, Zelle can be made to provide merchants with a payment processor that has lower fees. Many product-based businesses accept PayPal, Venmo, and Cash App. I wouldn't be surprised if they stop using those services and start using Zelle. Nearly all Americans have a bank account with the big banks, which means that they have access to Zelle.

If the banks decide to pass down the processing fees to the merchants, I do wonder how the flat payment processing fee system would work. Would they charge a flat $0.45 transaction fee as a way to make Zelle a more competitive payment processor?

Since interchange fees are high because the costs are made to cover the costs associated with accepting, processing and authorizing card transactions, by removing the third parties (i.e. Mastercard, Visa, PayPal, etc.), payment processing fees can be less. Since the Big Banks own Zelle, Zelle can replace those payment processors.

In the meantime, merchants will have to hope that government regulators can impose a cap on payment processing fees. And I wouldn't be surprised if the US chooses to replicate the EU's regulations on payment processing fees by imposing caps on fees.

Here are the sources of the payment processing fees:

Thanks for the interesting info on transaction fees and the angle for merchants. Do you follow $ADYEY? Where would you put them in the midst of all this and what implications might regulated caps on processing fees have for them?
View 4 more comments
My August Returns Are In!... And The Good Trend Continues
Retirement Portfolio
In August, I opened two new positions in $NET and $PCOR. I added to three times to $MKL , $TYL, $MCD, and $WM as part of my 401k DCA and added to no other positions. Another relatively quiet month. I also added to $JPM, $AAPL, $SBNY, $COST, $O, and $SBUX via DRIP. I exited $MTCH and sold 32% of my shares in $BMBL.

My retirement portfolio was down 2.54% in August but that was less than my benchmark SPY portfolio (down 4.41%) and benchmark QQQ portfolio (4.51%). I'm now down 37.40% YTD compared to my SPY benchmark at 16.52% and QQQ benchmark at 21.72%.

My best performing retirement positions YTD:
  • $SWAV is up 96% YTD
  • $EGIO is up 17% YTD
  • $WM is up 14% since I started buying a couple months ago

My best performing retirement positions in August:

My top 10 positions now make up ~35% of my portfolio. The top 6 remain in the same order of $MELI, $AAPL, $AMZN, $F, $GOOGL, and $SHOP. $SWAV jumped up from 9th to 7th after a great month with great earnings with $NVEE, $SIVB, and $COST rounding out the top 10.

Looking forward to September, I'm contemplating exiting my $SQ position. I'm turned off by Jack's comments and his insistence on $BTC.X being the be all and end all. I don't mind the crypto exposure but the Bitcoin only hardline is narrow-minded in my opinion. If you made me czar, I'd actually just have Square exit their crypto entirely and focus on what they're good at.

I'm also considering exiting $MMM in my 401k and replacing it with one of $ABBV, $BEP, $DEA, $HSY, $MKC, $MTN, $TGT, $TROX, $UNP, or $UPS but I need to research them first before deciding.

Taxable Portfolio
In August, I only added to $DT. No positions in this brokerage pay a dividend so there was no DRIP and I did not exit any positions.

My taxable portfolio had a second great bounce back month, up 9.56% after being up 13/67% in July. My benchmark SPY portfolio was down 3.64% and my benchmark QQQ portfolio was down 4.18%. I'm now down 30.15% YTD compared to my SPY benchmark at 14.84% and QQQ benchmark at 21.43%.

My best performing taxable positions YTD:
  • $TMDX is up 172% YTD for me. Wowsers.

  • $MSP with a 39.49% return YTD - RIP as is had such a great return because it was acquired.

  • That's it. None of my other 14 positions are positive. Whomp whomp.

My best performing taxable positions in August:

My top 10 positions continue to make up ~90% of my portfolio as I only have 14 positions in this brokerage. The top 10 remains basically the same with $SNOW, $TMDX, $ATZAF, $SILK, $DT, $LMND, $NCNO, $CPNG, $OM, and $BIGC.

Looking forward to September, I already added to $ATZAF as my monthly add. I don't expect to make any other moves but we shall see.
post mediapost media
$SQ Slowly Showing It Can Be a Advertising Company via Cash App:
$SQ Cash App will now let users pay online beyond the Square network, allowing brands to promote their selves via discounts on Cash App.

7 merchants are currently available at launch with more in the pipeline:

Users can now:
  • Explore promotions from Cash App’s Discover tab.
  • Select the Cash App Pay option at checkout.

It’s a real shame Cash App isn’t available here in Australia, I think it would do extremely well.

I’m long $SQ
post mediapost media
Bullish on social money. Brands being able to promote themselves via discounts is powerful— it’s the coupon industry but more personalized, with better timing, and more convenient.

I hope Cash App makes it to Australia soon! How fast have they been rolling out in new countries?
Add a comment…
US Portfolio August Results:
Performance YTD: -51.24% vs SPY: -17.85%
Portfolio By Weight:

$GOOG - 15.02%
$DDOG - 12.24%
$SE - 12.14%
$PLTR - 11.16%
$ZS - 7.43%
$SQ - 7.07%
$TTD - 5.85%
$ABNB - 5.80%
$QQQ - 5.58%
$DOCN - 5.30%
$TSLA - 4.33%
$SCHD - 3.04%
$MQ - 3.02%
$OPEN - 2.02%

Tough way to finish this month... Feeling good about completely selling out of my $NVDA and taking profits, it was my largest position at the end of July. Still holding the cash and plan on buying back in after the stock settles. Going to be a tough end of the year for it, I believe.
post media
Keep the head up my man. Block has been a sore one for me too in terms of YTD performance. Managed to pick some up for ~$60 though, which is cheaper than my purchases during the pandemic. Business is considerably stronger today as well.
Add a comment…
August'22 - Growth Portfolio Update
Sells: None

  • Made some adds with the cash coming in. I am looking to add some $CRWD on weakness here as well as $MELI.

YTD return: -33.9%
  • Quite the rollercoaster of a month with most increase being wiped out in the past week after the Jackson Hole speech..
  • I take these price weaknesses to add to the businesses that are still executing - great for the long-term!

Other comments:
  • $NU is a new buy for me in Aug. Took a starter 1.6% position at $4.71 after diving into research and chatting with a few great investors. Planning to add and bring up to ~5% position eventually.
  • I plan to deploy more cash into market weakness. Slow & steady!

Always happy to collaborate and hear your thoughts! Please comment below or send me a DM.
post mediapost media
Thanks for sharing! I love so many of these companies, great choices. I would love to know your thoughts on NU Holdings. I have been interested in them for a while and started reading more. My fiance is Brazilian, so I helped her open an account with them; super easy.
View 5 more comments
Zack Morris's avatar
$20.6m follower assets
Block's May 2022 Investor Day $SQ
Finally got around to reading the transcripts and slides from $SQ's recent investor day and wow...I've never come away more incrementally bullish on a company after an investor day.

The whole team and in particular Amrita do an excellent job of clearly articulating the different businesses, the strategy and the economics. Unlike many investor days, Block's is extremely digestible and I came away with a clearer understanding of Block's businesses and how they interact.

Ecosystem of Ecosystems

Square (Seller) is an ecosystem all to itself.

Cash App is an ecosystem all to itself.

Afterpay is the ecosystem that is going to serve as the connective tissue between these two ecosystems, creating and ecosystem of ecosystems.

Afterpay was the asset that both the leaders of Square and Cash App said they wanted for their own ecosystem, independent of the other ecosystem. It's going to be integrated into Cash App, driving discovery for consumers and serving as a lead generation platform for merchants, and it's going to be integrated into Square, giving customers another way to pay and driving conversion and higher average order values (AOVs).

The cohort economics for both Square and Cash App are stunning. Block admitted that they have been too conservative in growing each business, in particular Cash App, and are going to be ramping investment and increasing CAC to grow more aggressively given the exceptionally strong customer cohort economics they're seeing from both platforms.

Square and Cash App each have two of the most desirable traits in business: network effects and a royalty on their customer's growth. Afterpay will start to layer network effects on top of network effects, and accelerate global expansion efforts as they seek to leverage cross-border network effects.

And all of this will be growing concurrent with developing their Bitcoin wallet, Bitcoin mining hardware, TBD and Spiral which A) will drive Bitcoin adoption and decentralization, strengthening the network but also B) integrate with Cash App, increase consumer touch points and monetization opportunities, and drive adoption (especially globally and in emerging markets) and those same cross-border network effects.

The full transcript is worth a read: https://investors.block.xyz/Investor-Day-2022/#

But if you're pressed for time, this slide deck that Amrita presented drives home the most important points, in my view: https://s29.q4cdn.com/628966176/files/doc_presentations/2022/05/Business-Model-Block-Investor-Day-2022-(1).pdf

Disclosure: long $SQ
I put off watching it for a while because there was hours upon hours of content, but it was certainly worth it. Quite happy people are less pumped about Block now that it's shares have fallen, I bought a little at $60 a few months back, which is lower than I managed to buy shares at during the pandemic, lol.
Add a comment…

Longest holders

Commonstock is a social network that amplifies the knowledge of the best investors, verified by actual track records for signal over noise. Community members can link their existing brokerage accounts and share their real time portfolio, performance and trades (by percent only, dollar amounts never shared). Commonstock is not a brokerage, but a social layer on top of existing brokerages helping to create more engaged and informed investors.