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Why Square Is Exciting Wall Street

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Square sitting on $2.0 trillion opportunity

Square (SQ) is set to release its second-quarter earnings results at a time when several Wall Street companies have issued notes in praise of the company and predicted a bright future for its shareholders.

Credit Suisse recently upgraded its rating on Square to an “outperform” from a “neutral” and raised its price target on the stock to $81 from $44. Square is currently trading in the vicinity of $71.

According to Credit Suisse, the growth opportunity for Square is enormous given that the company has been expanding its product offerings for merchants, allowing it to serve not only small traders but also medium-sized companies. 

In addition, Credit Suisse says that Square has barely scratched the surface of its addressable market. The company estimates that Square has captured only 3.0%–4.0% of nearly $2.0 trillion worth of global small- to medium-sized business payment volumes.

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Weebly acquisition grabs attention

Susquehanna Financial Group raised Square’s price target to $74 from $53 and maintained a positive rating on the stock, saying that it had made the right move in acquiring website builder Weebly.

SunTrust Robinson Humphrey hiked Square’s price target to $66 from $45, saying that the company had demonstrated an impressive ability to monetize its products.

But not everyone on Wall Street is sold on the idea that Square is doing well and the future is bright. BTIG recently reiterated its “sell” rating on Square, claiming that the company’s lending business is a risky venture that could implode in the future.

A $24 million loss

Square suffered a $24 million loss in the first quarter. Lending Club (LC) saw a loss of $31.2 million in the first quarter, and its fellow online lender OnDeck Capital (ONDK) reported a loss of $1.9 million in the same period.

PayPal (PYPL) and Amazon (AMZN) generated profits of $511 million and $1.6 billion, respectively, in the first quarter.

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