Since this year’s March lows, shares of Square (NYSE:SQ) are up more than 500%. But one of the factors responsible for Square’s stellar performance has been bitcoin, which not only misleads investors, but might also be driving the company’s valuation to dangerous, un-earned heights.
Square’s business model consists of two ecosystems. First, it provides small and medium-sized businesses with all the tools they need to easily set up and run their shops. Second, it offers the Cash App, which started as a small peer-to-peer payments app, but over time has evolved into more of a one-stop-shop for all things consumer finance. In 2018, Square gave consumers using the Cash App the ability to easily trade bitcoin.
Any time a customer buys bitcoin on the cash app, Square generates money by charging a small fee on those transactions. However, because of accounting