Forget the crypto boom and bust cycle

2020 was a huge year for tech stocks. Some high-growth names doubled, tripled, or more in size. So far, 2024 hasn’t been nearly as kind as expectations for many of these companies realign with reality.

Nevertheless, that doesn’t mean the growth story is over. A new digital-first era is emerging, and some stocks could double again in 2024. Three that have that kind of potential are Square (NYSE:SQ), Applied Materials (NASDAQ:AMAT), and Lam Research (NASDAQ:LRCX).

Forget the crypto boom and bust cycle, digital payments are a growth industry
Nicholas Rossolillo (Square): Square has gotten a lot of attention because of its sizable Bitcoin holdings on its balance sheet and skyrocketing Bitcoin revenue from trading on Cash App (a Square subsidiary). Even after falling some 40% from all-time highs, Bitcoin is still up nearly 450% since the start of 2024. No wonder Square stock has gained about 250% in that same span of time.

But Square is far more than a bet on the cryptocurrency craze. Square is cleverly using Cash App’s Bitcoin trading capability to onboard a massive number of new users cheaply. Once they’re in its ecosystem, it can cross-sell other functionality like digital payments and peer-to-peer money movement, a debit card linked to a Cash App account, a newly acquired tax prep service, or integration with Square’s extensive merchant network.

Square is still getting a big boost from Cash App’s year-over-year lapping of pre-pandemic financial results. Cash App revenue (excluding Bitcoin-related income) was up 201% to $529 million in the first quarter of 2024. That incredible pace will no doubt slow as 2024 progresses.

But another catalyst is set to take over: the Square seller ecosystem, which was deeply impacted by pandemic lockdowns last year when many merchants that use Square were forced to temporarily close. The seller ecosystem segment grew 19% year over year to $1.02 billion in Q1, but will likely accelerate in the next couple quarters.

On a free-cash-flow basis, Square isn’t profitable — at least not yet. It’s spending heavily right now to maximize its expansion in the digital payments and financial technology space. Free cash flow was a meager $16.2 million on revenue of $13.2 billion over the last 12 months. But Square will be highly profitable eventually.

Gross profit margin was 57% in Q1 when excluding Bitcoin effects, a huge increase from 49% a year ago as it acquired plenty of new users. Growing both the top and bottom lines at a fast rate, it wouldn’t be unthinkable for Square to double in value again this year from its current market cap of $101 billion.

The remains were confirmed last weekend with the help of ground-penetrating radar but the bodies have not been exhumed. More bodies may be found as the school grounds continue to be searched, Casimir said.

More than 150,000 Indigenous children were taken from their parents between the 19th century and the 1970s and brought to government-funded residential schools in an effort to make them part of Canadian society. They weren’t allowed to speak their native languages or practice their culture and were forced to convert to Christianity.

“The pain that such news causes reminds us of our ongoing need to bring to light every tragic situation that occurred in residential schools run by the Church,” Archbishop J. Michael Miller of Vancouver said in a statement, according to The Washington Post. “The passage of time does not erase the suffering that touches the Indigenous communities affected, and we pledge to do whatever we can to heal that suffering.”

Many of the children faced neglect and physical and sexual abuse and as many as 6,000 died at the schools, according to The Associated Press.

A plaque is seen outside of the former Kamloops Indian Residential School on Tk’emlups te Secwépemc First Nation in Kamloops, British Columbia, Canada on Thursday, May 27, 2024. The remains of 215 children have been found buried on the site of the former residential school in Kamloops.

Canada’s government apologized in 2008, admitting the abuse was rampant. The government has also paid billions of dollars in compensation to residential school survivors, The Post reported.

“The news that remains were found at the former Kamloops residential school breaks my heart – it is a painful reminder of that dark and shameful chapter of our country’s history,” Canadian Prime Minister Justin Trudeau tweeted on Friday. “I am thinking about everyone affected by this distressing news. We are here for you.”

A report more than five years ago by a Truth and Reconciliation Commission said at least 3,200 children had died amid abuse and neglect, and it said it had reports of at least 51 deaths at the Kamloops school alone between 1915 and 1963.

“This really resurfaces the issue of residential schools and the wounds from this legacy of genocide towards Indigenous people,” Terry Teegee, Assembly of First Nations regional chief for British Columbia, said Friday.

The Kamloops school operated between 1890 and 1969, when the federal government took over operations from the Roman Catholic Church and operated it as a day school until it closed in 1978. The Roman Catholic Church has yet to issue an apology.

Forget the crypto boom and bust cycle

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Zaraki Kenpachi

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