Jack Dorsey’s decision to support bitcoin trading in the Square Cash app is paying off. Payments platform Square Inc, of which Dorsey is at the helm, got a boost on Wednesday after Wall Street analysts said BTC trading would bolster the company’s quarterly results. The app lets customers trade BTC from their Cash App balance almost instantaneously, which is an attractive feature for traders.
According to CNBC, Nomura Instinet expects Square could experience a “sizeable boost” to its top-line and bottom-line results in the current quarter, which the company reports on May 2. Nomura Instinet analyst Dan Dolev also said in a note to clients that Square could lift its adjusted EBITDA guidance as a result of the bitcoin effect by a possible 10% to the upside.
“This can help offset rising investment costs required to broaden Square’s international presence,” according to Dolev in the note cited by CNBC.
Investors cheered the news, with Square’s stock climbing nearly 5% higher at the end of Wednesday’s trading.
Nomura Instinet’s Dolev already had a buy on Square and he reiterated that rating while also lifting the price target from $64 to $65. Meanwhile, as of Thursday morning, the stock, which is already on a tear and has advanced more than 40% year-to-date, was trading at just over $51 per share, which suggests it remains undervalued.
Square announced support for bitcoin trading in beta for its cash app last year, and Wall Street has been cheering the stock ever since. The company presciently recognized an opportunity to capitalize on the rise of mobile payments and millennials’ interest in decentralized cryptocurrency bitcoin. Square said in its fourth quarter 2017 earnings report:
“[Customers] can now buy and sell Bitcoin in Cash App. We observed that this was a feature our customers wanted, and we support Bitcoin because we see it as a step in the long-term path toward greater financial access for all.”
Bitcoin trading officially launched in January, when co-founder Dorsey tweeted the following message on the platform where he also banned ICO and cryptocurrency related ads.
It’s unclear if the company will break out the bitcoin-generated results. Dolev says between 2% and 6% of Square Cash customers trade BTC, which could bolster Square’s adjusted revenue by as much as 3%. Another way of putting it is Square’s added yearly revenue per user could be $125.
Square’s Dorsey is a bitcoin bull and believes that the leading digital currency will surpass fiat money and emerge as the “single currency” of the world and internet over the course of the next decade.
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Last modified: March 4, 2021 5:06 PM