How High Will Square Stock Go?

How High Will Square Stock Go? Over the course of the last year or so, consumers have seen many once-sturdy businesses fail and just as many seemingly innocuous businesses soar to once-unimaginable heights. This has nothing to do with the status quo as we knew it and everything to do with the unfathomable impact of the novel coronavirus.

We’d heard of recession-proof businesses after the financial crisis of 2007-2008, but COVID-19 brought with it a new phenomenon: pandemic-proof businesses.

As an influx of consumers flocked to online shopping, Square proved to be one such pandemic-proof business: SQ share price soared on the New York Stock Exchange, but as the pandemic rages on, it’s uncertain whether Square stock will continue its ascent or begin to trend downward. Just how high will Square stock go?

Square Is Replacing The Cash Register

While he’s undoubtedly known best for creating and serving as co-founder for social media giant Twitter (TWTR), Jack Dorsey has done more than just create one of Facebook’s greatest rivals. He also co-founded Square, Inc. back in 2009 alongside billionaire businessman Jack McKelvey.

Square officially launched in 2010, but it took another five years for it to be traded as a public company on the New York Stock Exchange and another five years after that for it to reach a market capitalization of $100 billion.

Square is a financial services and digital payments company that has essentially replaced the old school cash register for many small businesses across the country and even throughout the world.

Square revolutionized the checkout process by inventing a way to turn iPads, iPhones, and other smartphones and tablets into a way to conduct transactions — complete with card swipes and even cash drawers in some models.

Dorsey’s firm also owns Cash App, an app that allows person-to-person money transferring and has proved to be a worthy competitor for PayPal (PYPL) and its subsidiary Venmo since its creation in 2013.

Bitcoin A Boon For Square Revenues

To be frank, Square’s revenues are rising rapidly. They’re practically skyrocketing, really.

In January of 2019, Square reported nearly $3.3 billion in revenue. By December of 2020, they reported nearly $9.5 billion. While it’s due to a combination of factors, one of the largest being COVID-19, one of the leading factors is the success of Square’s Cash App.

As a matter of fact, over half of their profits for the fourth quarter of 2020 was due to revenue from Cash App.

While this might seem like an insignificant factoid, consider this: by introducing bitcoin trading to their platform, Cash App became the app of choice for millions of crypto traders. According to Square figures, Cash App generated over $1.75 billion in bitcoin revenue and managed to make $41 million in gross profits off of bitcoin trading — that’s just in Q4 alone. Needless to say, Square revenues are definitely rising.

Will Square Earnings Go Up?

Given the sheer amount of success Square has had with Cash App and the continued growth of both bitcoin and other cryptocurrencies, namely Dogecoin, it seems obvious that Square earnings will continue to go up into 2021. Not to mention, bitcoin has soared to record highs in the months since the Q4 earnings report in December 2019.

One bitcoin would have gone for $28,990 on New Year’s Eve 2020. By April of 2021, bitcoin had more than doubled this: over $63,000 at its last peak as of this writing.

If bitcoin was such a strong force for Cash App and Square as a whole in 2020, just imagine how much earnings will increase in 2021.

Is Square Stock Undervalued?

Despite its promising earnings and their continually rising revenues, Square’s stock price has looked like a roller coaster for the past six months or so.

Since November of 2020, Square’s stock has risen and fallen and risen and fallen to no end, creating the look of a hilly plateau. It will go high, hitting around $250-$275 a share, then it dips lower, hitting around $200 a share. It hasn’t broken out either side of the range for a while. This tumultuous up-and-down makes for a notably undervalued stock — especially in light of their projected rise in earnings.

Crypto Volatility Pose A Risk To SQ Share Price

As is the case with buying any stock, there are going to be risks to buying Square stock (even if they are enjoying rising earnings and can be classified as undervalued).

Thankfully — speaking broadly — Square is relatively light on major risks. (At least, it’s nowhere near as daring as, say, GameStop or AMC.)

Square is performing nicely, even as more and more small businesses fail as a result of COVID-19 fallout. Cash App is also doing quite well, even as cryptocurrency continues to rise and fall unpredictably as time goes on.

Probably the riskiest move Square has made in the past several months that’s worth mentioning is their $297 acquisition of a majority stake in Jay-Z’s music streaming service Tidal. Still that purchase price is a drop in the ocean relative to the SQ market cap.

With the great success of Spotify in the past several years, many questioned Square’s motives here — particularly because Square is a financial services and digital payments company and not a prominent figure in the music industry. Management’s reasoning behind the move remains to be seen.

How High Will Square Stock Go?

The answer to the question of how high will Square stock go depends on who exactly you ask. While some would like to argue that Square stock will not rise — and will, in fact, drop down under $200 in the next 12 months — most seem to be in agreement that Square will either continue its plateau or rise exponentially.

In other words, the overwhelming majority seem to argue that Square’s stock will almost certainly rise to some degree. Whether it’s a slight rise that takes the stock up to the upper $270s or a major increase that shoots Square stock up to the upper $300s remains to be seen.

Rest assured, Square shows all the signs of a successful company and, as a result, their stock price is definitely forecast to rise.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.