Square (NYSE: SQ) has been one of the top-performing stocks on the market in recent years. The mobile payment company's stock price has returned more than 1,100% over the past five years, and this year it is up more than 150%. Square has been a growth machine, pandemic or no pandemic.
With such strong growth, it has attracted a lot of investors -- and a lot of expectations. At Friday's close, its price-to-earnings ratio was a ridiculously high 245 and its price-to-book-value an astronomic 34. Is Square primed for a correction if the tech bubble bursts? And if so, is it still a buy today?
The technology sector has driven the resurgence of the stock market since its March lows. Stock prices have skyrocketed for many tech companies, particularly those, like Square, that have provided a critical service while businesses have shut down or scaled back during the pandemic. Square's technology allows sellers to process payments, payroll, and other functions, and it lets consumers send and receive money through a mobile app. Its services has been in high demand at a time when people are staying and working at home and social distancing. That has led to meteoric growth.
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Is Square a Buy Even If the Stock Market Crashes?