We now live in a world where the term “trillion” is routinely used, and not just when talking about massive government finances. Several publicly traded companies have been valued in the trillions of dollars, while others have been valued in the hundreds of billions of dollars. It’s possible that a new breed of corporation may join the 13-figure mega-market capitalization club.
In the next ten years, who do you think will be able to do it? Square (NYSE: SQ) and Netflix (NASDAQ: NFLX) both have a chance. This is the reason.
Square is capitalizing on the growing popularity of mobile and cloud computing.
In the last five years, Square’s stock has climbed by more than 2,100%! Despite its immense success, the corporation is only worth $117 billion at the time of writing. Because of its popularity among younger consumers and the extensive use of mobile devices and cloud computing platforms, this fintech could reach a $1 trillion valuation in the next decade.
Square, of course, is designed for long-term growth and dominance in the digital payments and banking industries.
Square, on the other hand, is completely full right now. Small and medium-sized businesses, which the company is aiding in responding to the pandemic’s consequences, are growing more interested in the merchant ecosystem.
Changes are also being made to the Cash app. Square’s recent acquisition of a majority stake in Tidal, a music streaming service, demonstrates that the corporation sees itself as more than just a provider of digital banking and money management tools. Its mission is to help businesses and artists achieve their goals, thereby boosting the creator economy.
While integrating a “buy now, pay later” function into Afterpay will be a major undertaking, it will provide Square with an on-demand credit solution. Without a tax preparation service (acquired from Credit Karma) and a developing stock investing option through the Cash app, Square can’t provide clients with a modern banking experience.
The real kicker is that Square’s banking and payment infrastructure comes with an efficient cloud-based and mobile-friendly operation that promises a considerably higher profit margin in the future than a traditional bank. Square may take a few years to reach its full potential, but if it can keep up its speed, the rewards might be huge.
Netflix stock at a trillion dollars?
Netflix already has a $260 billion market value, which means it just needs to triple its shares to achieve the trillion-dollar barrier.
This corresponds to an average annual return of 14.4 percent over the next ten years. Netflix, of course, has outperformed the market over that time period, averaging a 38 percent yearly return.
Netflix has a few tricks under its sleeve to help it develop, despite the fact that past performance is no guarantee of future results. The streaming video sector is still in its early stages of development. The company’s 209 million paid subscribers may appear huge today, but this critical number should be able to expand multiple times before it reaches its peak.
Netflix, on the other hand, has the ability to raise prices and expand its product offerings. The next phase, for example, will be an online gaming service that will be offered as a free add-on to existing video subscribers, similar to how video streams were first offered as a free bonus to DVD postal customers.
Competing streaming services are unlikely to surpass Netflix. There is room for many big winners in this sector, and Netflix is expected to remain in the lead for years to come.