Square is trading higher on news that the payments company is soon to venture into retail and commercial banking by offering checking and savings accounts.
Square shares rose 2.5% after Bloomberg reported on hidden software code concerning the accounts being found in a recent change to Square’s app for the iPhone.
The firm calls the new offering, Square Savings and Checking, according to the code hint. The code also seems to reveal that the checking account will integrate with Square’s existing debit business.
An analyst from Tigress Financial, Ivan Feinseth, recently doubled down on his buy rating on the company and placed a $295 price target with the anticipation that Square is perfectly-positioned to reap rewards in the post-pandemic environment.
“Square’s capabilities will keep driving new products that take the company beyond payments and support growth, increasing profit, and maximizing value creation,” Feinseth said in a recent note.
However, Jim Cramer believes Square competitor PayPal (PYPL) is likely in even a better position to benefit from digital banking, thanks to their new digital wallet, called “Super App,” combined with the company’s other products.
“We believe the presence of this product, which opens in Q3, will make PayPal’s product more competitive compared to Square’s App while also giving increased engagement and therefore monetization over time,” Jim Cramer said.
Other plans already in the works include pay later and in-store payments “… will sustain or accelerate, the company’s growth while making it more competitive versus their competitor Square, which is trading at a much higher valuation of 2x on a p/e.”
Author: Scott Dowdy