Square Stock Outperformed in 2020, Looks Poised to Continue
By Ambrish ShahJan. 8 2021, Published 11:40 a.m. ET
On Jan. 7, Square stock rose by 5.6 percent, while the S&P 500 rose by 1.5 percent. The stock was up $12.59 from its previous closing price of $226.89 on a volume of 10,150,722 shares. Over the past year, the S&P 500 has risen by 16.2 percent, while Square stock has gained 252.5 percent. Is Square stock a buy or sell at this price?
On Jan. 7, Square stock surged significantly because of an analyst note about the stock and the surge in bitcoin’s value. Mizuho analyst Dan Dolev thinks that the appreciation in bitcoin’s price is a boon for Square’s revenues. The company’s crypto business could generate $1 billion in gross profits if bitcoin reached $100,000 by the end of this year. Dolev added that “if bitcoin dropped to $10,000, its profit may still double, helped by growing user base and higher engagement,” according to TheFly.
Square on Stocktwits
Square stock has become a major talking point on social media platforms. An investor named Moneymr on Stocktwits is betting on Square stock because the company takes Bitcoin as a payment method and utilizes crypto. Square’s Cash App will likely overtake Venmo because the Square payment system is being used by many businesses.
Square stock doesn’t pay dividends
Currently, Square doesn’t pay dividends.
Square’s valuation
On Jan. 7, Square stock rose by 5.6 percent and closed at $239.48. At that closing price, the market capitalization was $108 billion. Square stock trades at a forward PE multiple of 185.19x.
Square’s stock forecast
Square stock has risen by 10 percent in the last five days and by 252.2 percent in the last year. The stock is trading 1.6 percent below its 52-week high of $243.38 and 640.7 percent above its 52-week low of $32.33.
According to estimates compiled by CNN, analysts' median target price is $215 for Square, which is 10.3 percent below its current stock price. Among the 44 analysts tracking Square, 25 recommend a buy, 15 recommend a hold, and four recommend a sell. The highest target price of $300 is 25.2 percent above the stock's current price, while the lowest target price of $140 is 41.6 percent below the stock's current price.
Square stock is a good buy
Square stock is a buy based on the company's strong growth outlook. The company’s business grew instead of shrinking during the COVID-19 pandemic. In the third quarter of 2020, Square’s sales grew by 140 percent mainly due to a significant surge in bitcoin sales. The company’s peer-to-peer money-transfer app Cash App also emerged as a digital alternative to traditional banks.
