Why Square Inc Stock Is Up 86.5% So Far in 2018

What happened

Shares of mobile payment company Square Inc (NYSE:SQ) have jumped 86.5% so far in 2018, according to data provided by S&P Global Market Intelligence, as operating conditions continue to improve. If the company's growth keeps up, the sky is the limit for the stock.�

So what�

The stock really started to perk up after Square reported first-quarter results. Adjusted revenue jumped 51% from a year ago to $307 million, adjusted EBITDA rose 33% to $36 million, and net loss nearly doubled to $24 million. That loss may sound bad, but spending on research and development and sales to grow the business is what's driving it, and that's a good idea right now.�

Image source: Square.

What's encouraging from an investment standpoint is that EBITDA is rising, indicating that money is starting to flow to the bottom line for Square. I also like that big sellers are beginning to use the platform. Management said that 20% of annualized gross payment volume was from sellers with over $500,000 of transactions, up from 16% a year ago. If Square can move beyond food trucks and salons to bigger retailers, it would be great for the sustainability of the business.�

Now what

Since Square isn't profitable, it's tough to call the stock cheap by any traditional metrics today. But the company is growing at a rapid clip and upending the traditional payments business in the process. As Square expands its offerings to include more services -- from scheduling to capital -- I think it could be one of the most disruptive payment processing companies on the market. This is a business with a bright future still ahead.