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Why Square Is Being Compared to Amazon and Google

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Feb. 13 2018, Updated 10:31 a.m. ET

Price target lifted to $64

In a recent research note to clients cited by CNBC, Wall Street company Nomura Instinet reiterated its “buy” rating for Square (SQ) stock and raised its price target to $64 from $48. Square is currently trading at around $41, so Nomura’s new price represents a substantial upside potential.

According to Nomura analyst Dan Dolev, Square is like Amazon (AMZN) and Google (GOOGL) in their early days, meaning that it’s difficult to decode the company’s true potential using traditional valuation methods. Using a discounted cash flow model to value Square, Nomura gave it the highest price target on Wall Street. Amazon and Google have disrupted their industries.

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Over $1.8 billion in loans

Square is a financial technology company whose services span payment processing, cash transfer, investing, and lending, an area where it competes with PayPal (PYPL) and Amazon. Square has supplied more than $1.8 billion in loans since launching its credit service in 2014. PayPal and Amazon have loaned about $3.0 billion each.

Square allows users of its Millennial-oriented cash app to buy and sell bitcoin. While the company is showing support for the digital currency, companies such as Facebook (FB) are running away from it.

Over $17 billion in payments processed

Nomura sees Square taking market share from its competitors, which could transform the company’s fortunes in the coming decade. Square processed $17.4 billion in payments in 3Q17, an increase of 31% from 3Q16.

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