Square (NYSE:SQ) Cash app users would be willing to pay more than the current 1.5% fee to instantly transfer funds to a bank account, writes Macquarie analyst Dan Dolev.
The average price users were willing to pay was 2.3%, according to a recent customer survey by Dolev.
He estimates that raising the instant-deposit fee by 50 basis points "could result in $250M-$300M, or ~10% additional sales growth in 2021 versus consensus estimates."
He rates Square at Outperform with a $105 price target.
Square (NYSE:SQ) rises after Credit Suisse initiates coverage with an Outperform rating.
Sets price target of $84; implies 21% upside potential vs. $69.29 close on Thursday.
Bernstein analyst Harshita Rawat notes that payment processing themes to watch this year include new revenue streams, M&A, further digitization of cash, growing alliances with FAANGs, and fintechs entering China.
Sees upside for Square ( SQ +0.5%) near-term as "market gets comfortable with 'underlying' margins pre-preinvestments and GPV improvements in '21"; keeps Market Perform rating.
Stephens analyst Brett Huff upgrades Square ( SQ +0.8%) to a Overweight from Equalweight after the mobile payment company changed its pricing to a "better setup."
He sees the price increase on merchant deposits adding to transaction net revenue and may result in lower churn benefits.
Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company's commerce ecosystem includes point-of-sale software and hardware that offers sellers to payment and point-of-sale solutions. It provides hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa ( EMV ) chip cards and Near Field Communication payments; Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; Square Register that combines its hardware, point-of-sale software, and payments technology; Square Terminal, a portable payments device that replaces keypad terminals, which accepts various payment types, such as tap, dip, and swipe, as well as prints receipts; and managed payments solutions. The company also offers various software products, including Square Point of Sale, Square Appointments, Square for Retail, Square for Restaurants, Square Invoices, Virtual Terminal, Weebly, Square Dashboard, Square Loyalty and Marketing, and Square Payroll. In addition, it provides Cash App, which enables individuals to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup, delivery, and catering to their customers; and Square Capital that facilitates loans to sellers based on current payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California.
As always, trade with caution and use protective stops.
Good luck to all!