Guggenheim Calls Square “Best Idea” in FinTech, Predicts Further Gains

Jack Dorsey may be facing some annoying problems with Twitter these days but the CEO’s other company is on a bit of a winning streak. Square’s stock is currently up 5% after Guggenheim Partners raised its price target for the company to $100 ($SQ trades for around $85 a share at the moment). Moreover, as CNBC reports, the firm also declared Square its “new best idea” and “highest conviction name” in FinTech.

The latest boost to Square’s stock price continues an impressive run. So far this year the stock has gained more than 136% and had a year over year gain of 227%. However, if Guggenheim’s predictions are accurate, this could just be the beginning. In a note sent to clients this week, analyst Jeff Cantwell wrote, “We expect a strong rate of revenue growth for SQ which should drive further share price appreciation.”

CNBC recalls that Guggenheim also named Square its “best idea” back in 2016. Since then the company has diversified its focus, expanding from payments solutions for small businesses to offering a number of related services and tools. As a result Cantwell expects “substantially higher” revenues from these services in the future, exceeding current Wall Street expectations. In fact, CNBC notes that Guggenheim’s revenue estimate for Square is 10% higher than the consensus forecast for 2019.

Speaking of additional services, the firm also called out Square’s P2P payments Cash app as another source of continued growth for the company. Beyond the app currently allowing for peer to peer transfers, Bitcoin purchases, and cash back savings via its own Cash Card debit card, the company has also been exploring expansions into investing, consumer finance, and other sectors. These ambitions led Cantwell to advise, “We think Cash App’s future revenue potential is underappreciated, we see it providing a key ‘services’ role for the underbanked.” Specifically, the Cash Card saw impressive growth in the second quarter with cardholders spending a total of $250 million.

While one could argue that Square’s “jack of all trades” (no pun intended, Mr. Dorsey) approach could spread the company’s resources thin, Guggenheim seems to believe that the company’s diverse slate of products are paying  — and will continue to pay — off. Furthermore Guggenheim’s praise and newly-bestowed titles for Square solidify the company’s position as one of the top FinTech companies in the U.S. Thus Square’s success in small business services, consumer tools, and on the stock market is not only a win for the company itself but also for the FinTech sector at large.


Also published on Medium.

Author

Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded DyerNews.com in 2015 to focus on personal finance and the emerging FinTech markets.

Other Articles by Jonathan Dyer

Zilch Adds $50 Million to Latest Funding Round

Despite some reversals of fortune in FinTech as of late, a growing U.K.-based firm has announced an additional investment. Recently, Zilch announced that it had extended its round with an additional $50 million in funding. The added funds bring their Series C to a total of $160 million, while the company has now raised $460 million in equity and debt to date. The extended funding round comes on the heels...

Top 10 Personal Finance Articles of the Month — June 2022 

It’s time again for one of my favorite features here on Dyer News: a look at the top 10 personal finance articles of the month. To start, we'll take another look at financial independence and freedom. Then, with the housing market going a bit crazy lately, we'll feature a pair of articles on home buying. Lastly, we'll cover tips for one-income households, finance after death, fighting inflation, and more. As...

Bilt Rewards Launches Travel Portal with Benefits for Cardholders

Last year, the startup Bilt made a splash when it announced a new service that would reward users for paying their rent. That premise was then expanded upon with the launch of the Bilt Mastercard, which is issued by Wells Fargo. Now, continuing to capitalize on both the hype of their product and the demand for travel, Bilt has debuted another new offering for customers. This week, Bilt Rewards announced...