Square Stock Surges as Virus Fuels Digital Payments -- Update
By Alexander Osipovich
Square Inc.'s stock has jumped 15% over the past week to close
at a record on Monday, as the coronavirus pandemic has prompted
consumers sheltering at home to make greater use of the payments
Class A shares of San Francisco-based Square closed at $118.97,
rising 4.9% for the day. Their price has more than tripled from the
low on March 20.
Some Wall Street analysts recently have grown more bullish on
Square, buying into the arguments of Jack Dorsey, its chief
executive and chairman, that the company will disrupt the
traditional banking and payments businesses.
As the stock market has rebounded in recent months, investors
have rewarded companies -- from technology giants to grocers and
makers of recreational vehicles -- that can benefit from
pandemic-driven shifts in consumer behavior.
It wasn't immediately clear that Square would be one of them.
Its stock dropped more than 55% from February to March, as
lockdowns led fewer people to visit small merchants that use
Square's popular credit-card reader for smartphones.
But Square has benefited from burgeoning activity in other parts
of its business, particularly its rapidly growing Cash App, a
peer-to-peer payments tool that lets users send and spend funds and
invest in stocks and bitcoin. The app's direct-deposit volumes
roughly tripled from March to April as many customers used the app
to receive government stimulus payments, Square says.
Other players in the payments business have benefited from the
same trends. During the past week, shares of PayPal Holdings Inc.,
maker of the rival Venmo app, have gained 4.7%. The S&P 500 has
risen 4.1% over the same period.
Last week, analysts at Rosenblatt Securities upgraded Square to
"buy" from "neutral," predicting that revenue from Cash App,
excluding bitcoin, would more than triple over the next five
"As Square develops, rolls out, and monetizes many services
across the payments and financials ecosystems, it will lay the
groundwork to make the company a need-to-own name for years to
come," Rosenblatt's analysts wrote.
Square's skeptics have said it is overvalued -- and that was
even before the recent run-up in its stock price. Based on its
closing price from Thursday, Square has an eye-popping trailing
price/earnings ratio of 186, compared with 112 for PayPal and 22.5
for stocks in the S&P 500.
Mr. Dorsey also has been criticized by some investors for
splitting his time between two roles, as CEO of both Square and
social-media giant Twitter Inc.
Write to Alexander Osipovich at
(END) Dow Jones Newswires
July 06, 2020 17:40 ET (21:40 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
Historical Stock Chart
From Jul 2020 to Aug 2020
Historical Stock Chart
From Aug 2019 to Aug 2020