Twitter and Square adapt to the changing world led by Dorsey

Twitter and Square have one major common factor; the CEO of both companies is Jack Dorsey. Dorsey was also involved in founding both firms. Now their combined market capitalization is about $ 150 billion. Square has almost three times the market value compared to Twitter.

Dorsey differs in his views from the traditional CEO of Nasdaq. He is a well-known bitcoiner, whose general view is that central bank money printing will eventually lead to hyperinflation. Indeed, Dorsey warned of future hyperinflation on his Twitter account.

There may be many opinions about the possibility of hyperinflation, but the strategies of both Dorsey-led companies reflect the CEO’s Bitcoin ideology. Bitcoiners believe Bitcoin to be the best hedge against inflation, or the depreciation of fiat currencies.

Dorsey has said in the past that there is nothing more important to him than working on and promoting Bitcoin.

Twitter

Twitter, who is always in a tug-of-war with Facebook, reports a nice improvement in its third-quarter results.

However, it has not helped the stock reaching new highs like many other stocks.

Note: Historical returns are not a reliable indicator of future returns.

Twitter’s third-quarter earnings recorded a $766 million loss related to a lawsuit which accused the company of misleading investors into revenue and user growth expectations.

As a result, the company posted a net loss of $537 million. In last year’s comparison period, Twitter made a profit of $29 million.

The company’s revenue in Q3 was about $1.3 billion, up 37 percent from last year. According to Twitter, Apple's privacy changes affected the result less than expected and the mild impact will continue into the fourth quarter. Snap and Facebook said Apple’s iOS 14 privacy changes were the main reason for business disruption in the past quarter.

Twitter’s EPS was $0.18 per share, well above the Wall Street forecast of $0.15 per share.

The mDAU (Monetizable Daily Active Users) had 211 million daily monetizable users, which met analysts’ expectations. The growth from last year was five percent.

Twitter’s advertising revenue grew 41 percent to $1.14 billion. Unlike Snap and Facebook, Twitter said its ads have not been affected by global supply chain disruptions. According to Twitter CFO Ned Segal, the company has avoided problems because more than half of the company’s ads are related to services and digital products.

In September, Twitter began partnering with Bitcoin company Strike. The collaboration allows tips to be given as bitcoins to Twitter users. In the past, tipping was done using traditional payment services such as Square Cash App or PayPal Venmo.

Twitter integrates the Strike Lightning wallet so tweeters can earn their tips as bitcoins. All Twitter users over the age of 18 can register their Bitcoin address on their Twitter profile. The company said it does not intend to charge any commission on the transactions. Strike's fee for transfers is approximately 0.3 percent.

Twitter share price started to rise by 3% after the announcement in September.

The significance of the collaboration for global payment systems, according to Strike founder Jack Mallers, is profound: “When connecting the fast, low-cost global Bitcoin transfers over the Lightning network to Twitter’s social network, the long-awaited money transfer disruption is significant”.

Thanks to the service, transferring money to any corner of the world is now as easy as tweeting. The tipping is Twitter’s latest way to help its users turn their efforts into money.

Twitter also announced that it will test the ability for users to authenticate and present their NFT collections. However, the company has been more or less silent about it ever since the announcement.

“There is a growing demand among creative people for applications running on blockchains. We want to help them participate in the promised decentralized Internet directly on Twitter,” commented Esther Crawford, Twitter Product Director.

With Vontobel’s BULL TWTR X3 V2 certificate one has the opportunity to participate with leverage in a potential rise of the price in the Twitter share. If the share price increases by one percent during the day, the value of the certificate will increase by three percent. The triple leverage also works when the share price drops by one percent. Then the loss on the certificate position is three percent.

The BEAR TWTR X3 V4 certificate will show a profit when Twitter share price falls. A one percent decrease brings a three percent return to the person who invested in the certificate. A one percent increase in the share price, in turn, results in a three percent loss on intraday trading in the certificate position.

Under the influence of Jack Dorsey, Twitter is entering the era of crypto assets, and the man’s other company, Square, makes no exception.

Square

Square is a financial services company that helps companies of all sizes from credit card processing to point of sale solutions.

The company has two reporting segments: Seller and Cash app. The Seller segment includes payment services, application solutions and other various services for vendors. The Cash App, in turn, invests in a peer-to-peer network where individuals can effortlessly send money to each other. It can also be used to invest in stocks or Bitcoin.

Square reported its Q3 results last week. The company’s revenue grew 27 percent from last year’s comparison period to $3.84 billion. At the same time, gross profit increased by 60 percent.

The result was driven by strong growth in Cash App’s Bitcoin transactions, which brought Square $1.81 billion in revenue. In its report, Square said Bitcoin revenue and total revenue fell from the previous quarter. According to the company, this was due to the relative stability of the cryptocurrency market in the third quarter.

The company’s EPS was $0.37 per share, slightly below analysts’ expectations.

Cash App’s total transaction volume rose 27 percent to $ 3.7 billion.

Square has benefited strongly from the pandemic-induced rise in online commerce.

Afterpay Ltd, a “buy now, pay later” company bought by Square for $ 29 billion, reported total revenue of $ 1.13 billion in the third quarter.

The share price is not far from its peak, although it started to fall by about three percent.

Note: Historical returns are not a reliable indicator of future returns.

Square is exploring the possibility of starting a Bitcoin mining operation. Dorsey’s goal would be to make Bitcoin mining more accessible to everyone, just as Square’s vision is to facilitate the ability of small businesses and sole proprietors to accept credit card payments. According to Dorsey, mining Bitcoin should be as easy as connecting an electronic device to a power source. Currently, mining is dominated by large players who have the opportunity to purchase the special equipment needed for mining on a large scale.

Bitcoin mining is already a highly competitive industry, but it does not discourage the CEO: “Mining needs to be more decentralized. The more decentralized it is, the more resilient it makes the Bitcoin network. Currently, mining is not available to everyone. Individuals do not have enough incentives to overcome the complexity of mining ”.

The company intends to integrate Bitcoin mining into Square’s hardware team, starting with architecture, design and creating a prototype of more powerful hardware, hash algorithms and energy architecture. According to team leader Jesse Dorogusker, creating a strong hardware foundation is just the prelude: “To create the value we seek, we need to deliver the entire package - hardware, software, production and innovative distribution to support miners around the world”.

Dorsey is also aware of the need for mining to be environmentally friendly. “Using clean and efficient energy in mining is an advantage to bitcoin’s economy, impact and ability to scale. Energy is a system-level problem that requires improvements in hardware, software, and integration to solve. What are the biggest chances of the situation? ”Dorsey asks in his tweet.

The Mötley Fool site believes Square may become one of the largest companies by 2035. According to the article, Square could revolutionize the banking sector. The company has the advantage of receiving data from an extensive business network, as it can gather information on the sales figures of its customers. Thus, the company could easily create a credit profile for the customer to grant a possible loan. This advantage over conventional banks could make it a fast and accurate player.

Vontobel's Turbos can be used to seek returns in both the rising and falling markets of Square's stock for investors who are willing accept the higher risk of leveraged products.

The TLNG SQ V6 turbo offers a 4.8-fold leverage on the stock at the time of writing. If the share price goes up by one percent, the value of the turbo will go up by 4.8 percent. Correspondingly, when the share price drops by one percent, the turbo produces a loss of 4.8 percent.

With the TSRT SQ V19 turbo, one can seek profit as the share price of Square falls. Thanks to the 3.07-fold lever at the time of writing, the value of the turbo increases by 3.07 percent as the share price falls by one percent. The loss, on the other hand, is 3.07 per cent when the share price rises by one per cent.

Trading Bitcoin can be done with Vontobel's mini-futures. Despite its name, mini-futures are not futures, but exchange listed securities. These securities are linked to the price of the Bitcoin Future in USD traded on the CME (Chicago Mercantile Exchange).

The MFL BTC1 V80-mini offers leverage for Bitcoin futures with a 3.42-fold lever. When the futures price rises by one percent, the value of the mini rises by 3.42 percent. When the futures price drops by one percent, the value of the mini drops by 3.42 percent.

The MFS BTC1 V34-mini offers 2.76-fold leverage on the Bitcoin future. If the price of the futures falls by one percent, the value of the mini rises by 2.76 percent. If the futures price rises contrary to the trader’s expectations by one percent, the mini generates a loss of 2.76 percent.

The price of Bitcoin (BTC/USD) is close to its all-time high of $ 62,000. As can be seen from the chart below, the price of Bitcoin remains extremely volatile.

Note: Historical returns are not a reliable indicator of future returns.

Potential investors should remember that the underlying instruments described herein and in particular cryptocurrencies such as Bitcoin can be expected to remain very volatile so the risk of losses is high especially when trading leveraged products such as Bull & Bear certificates, Turbos and mini-futures (long and short).