This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Tritium DCFC Limited (NASDAQ: DCFC) saw its shares jump 15.7% on Wednesday. It was a volatile day, though, as the stock made big gains only to end the day on the negative side. The company, which produces direct current fast chargers for electric vehicles, saw its stock close at $7.92 on Tuesday then open Wednesday at $8.12 before jumping all the way up to $9.16 in the first hour of trading. As the selling began, the stock dropped all the way to a low of $7.65 in the afternoon. The stock is still closer to its 52-week low of $6.42 than its high of $19.75. 

So what

Thanks partly to the current conflict between Russia and the Ukraine, the price of Brent Crude Oil has shot up above $114 a barrel. While that may be good for oil companies, it is also good for electric vehicle makers and any business connected with electric vehicles. The prospect of increased gas prices has convinced more consumers to look into electric vehicles and more governments to make decisions to boost EV production. On Tuesday, President Joe Biden specifically mentioned his administration plans to build more charging stations.

Even before President Biden's remarks, Tritium was operating with plenty of tailwinds. It recently said it had sales of $141 million in 2021, up 136% over 2020 sales. In the last six months of 2021, the company said it had sales of $98 million, up 416%, year over year.

There are several reasons why investors remain wary, though. The company isn't profitable, hasn't filed a true quarterly report yet, is relatively unknown, and is dealing with supply issues. The company said its contracted backlog as of Dec. 31 equals 48% of its 2022 revenue target, adding it expects $170 million in revenue in 2022.

Now what

The stock is still down more than 22% for the year. The big reason for Wednesday's wild swing is that a lot of investors, frustrated with the stock's decline, jumped at the opportunity to sell when the shares rose. The stock has only been trading as a public company on the NASDAQ since Jan. 14 of this year, not long before the company mentioned it plans to build a fast-charging plant in Lebanon, Tennessee.

There's a lot of hype around many EV stocks, so today's wild swing reflects both the excitement and the skepticism around a relatively new industry. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tritium shares just popped then flopped appeared first on The Motley Fool Australia.

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Jim Halley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The genius of Square Inc (NYSE: SQ) is the simplicity of its systems. On the back end, this fintech company is incredibly complex, but for users, it maintains an interface that is quick and easy. That's what initially attracted me to the share, along with seeing the growing number of merchants who used its Seller ecosystem and sang its praises. What's kept me in Square shares is seeing the company's continued innovations, especially those involving its Cash App.

The Square share price is up more than 196% over the past year. That's a dizzying climb, but one that's backed by the company's revenue and profit-margin improvements.

Crunching the numbers

In the third quarter, Square's gross profit was a reported $794 million, a rise of 59% year over year. Its net revenue, listed at $3.3 billion, was up 140% over the same period in 2019 and its adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of $181 billion was up 49% year over year.

The biggest growth in revenue has been in the company's Cash App, which management said generated $2.07 billion in Q3 or roughly 68% of the company's revenue. In the quarter, Square had gross profit growth of 212% year over year.

Square keeps adding to what Cash App does, and that's why it was one of the most downloaded financial apps in 2020. Users can store money, make payments to merchants or friends, manage credit cards, invest in stocks, and buy Bitcoin (CRYPTO: BTC) with the app. In November, after Square bought Credit Karma Tax for $50 million, it began offering its tax-prep software on the app for free.

Areas of concern

With the growth Square is seeing, it's not surprising that others will rise up to try to snatch market share. PayPal Holdings Inc (NASDAQ: PYPL) is a huge competitor to Square. In October, it launched a service in its PayPal digital wallet that, like Square's Cash App, allowed users to trade or purchase items in cryptocurrencies. While Square has the head start in the area, PayPal's a much larger company with $5.46 billion in revenue in Q3, so it has the size and resources to try to cut into Square's market share.

Some traders may also worry that Square shares have become overpriced, with a price-to-earnings (P/E) ratio of 390 and a forward price-to-earnings-to-growth (PEG) ratio of 5.30. That's less concerning, however, because Square is a classic growth stock with an early-to-market advantage. It is more concerned at this point with adding users than with making a profit. Through nine months, it said it spent $628 million on product development, up 26% year over year, and $781 million on sales, an increase of 78% over the same period in 2019.

The third thing to watch for is how Square shares fare when the coronavirus pandemic winds down. Square's business was helped last year because e-commerce ruled during the pandemic, driving more digital payments. More businesses also needed to use contactless payment to limit the spread of COVID-19.

However, I don't see Square solely as a pandemic play, but as one whose fundamental business model was just adopted more quickly because of the pandemic. Once merchants and users are in the Square system, there isn't that much churn because of the usefulness of its various platforms. 

SQ data by YCHARTS

Plenty of growth ahead

Cash App is growing because it also has share trading features that younger investors like, such as allowing the purchase of stocks in fractional shares and zero commission trades. It may also benefit from Robinhood's recent stumble regarding the GameStop Corp (NYSE: GME) trading controversy.

Cash App was already growing quickly before the controversy. According to the Business of Apps, an app industry website, Cash App surpassed PayPal's Venmo in new downloads in 2019 and was downloaded 90 million times last year.

Cash App went from 24 million daily active users in December 2019 to 30 million active users in December 2020. It's the No. 2 downloaded finance app after Robinhood, and on 29 January 2021, the day after Robinhood halted trades in AMC Entertainment Holdings Inc (NYSE: AMC) and GameStop, searches for Cash App hit their highest point this year, according to Google Trends.

While Cash App has been getting most of the attention, look for the company's Seller ecosystem to expand in the next few years.

The ecosystem has gone from being a niche service for mobile businesses, such as farmer's market vendors, to increasingly servicing larger sellers. There's obviously plenty of opportunity in both ecosystems. The company said it feels it has reached only 2% of a $60 billion opportunity in its Cash App and just 3% of a $100 billion market with its Seller ecosystem.

When the pandemic ends, Square's Seller ecosystem should start growing at a greater clip as people attend more outdoor events and go back to eating in restaurants, two areas where Square has a good foothold.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why I'm never selling my Square shares appeared first on The Motley Fool Australia.

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Jim Halley owns shares of Square. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), PayPal Holdings, and Square and recommends the following options: long January 2022 $75 calls on PayPal Holdings. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), and PayPal Holdings. The Motley Fool has no position in any cryptocurrencies mentioned. The Motley Fool Australia has no position in any cryptocurrencies mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.