The Numbers Behind Square’s $5 Billion Value

If you were writing a story like the tortoise and the heir only using that reference for business instead, then Square would certainly be the tortoise and someone like PayPal would be the heir. Since they first came on the market, Square’s shares have steadily grown mother after month and year after year. In 2011, Square was processing a mere $10 billion in transactions for the calendar year, $15 billion total in 2012, and $20 billion in 2013. However, they are projected to clock an amazing $30 billion in 2014 through their apps and free credit card readers.As they have become more popular and more retailers have started using their platform, the profits for the company have increased at the same rate. With their most recent round of funding, Square was valued at an amazing $5 billion. Not too shabby for a company that had a value under $50 million in 2009. Here’s a breakdown of Square’s rounds of funding and what the company’s value was at that point.

  • December 2009: $45 million
  • January 2011: $240 million
  • June 2011: $1.6 billion
  • September 2012: $3.25 billion
  • January 2014: $5 billion

As you can see above, Square has increased its value significantly in just 15 short months. Since they processed $20 billion in 2013 and project to process $30 billion in 2014, one may ask how those numbers line up. The simple fact of the matter is that investors are apparently betting on the next 12 months of income much more than the 3 year growth plan that most investments are predicated on.

Furthermore, since Square is growing into other segments of the market to take on Google Wallet and PayPal with their own twist called Square Wallet, Square is tapping into new ground constantly and turning up all sorts of new revenue streams. With payment processing getting easier and easier for both customers and merchants alike, the future is looking very bright for Square and their next valuation is likely to be even higher than this last round.