For someone who is already extremely good, they can deliver a killer performance even on a half-broken instrument. But for someone who is in the earlier stages of learning, this often just hinders them. Especially since a lot of habits learned early on are very difficult to correct later on, when it comes to music instruments. And having a terrible instrument can easily help with forming poor habits.
However, there is definitely a significant category of people who are more about upgrading and/or collecting gear rather than focusing on improving the actual skill. In that scenario, “this better instrument surely will be the reason for my skill getting improved” is used as a pretty common excuse. I would know, because i definitely fell for it before in certain aspects.
Note: not trying to take a dig at Squire, afaik their current offerings are all pretty decent entry level instruments. Was just addressing the overall larger point.