Square Inc.

Square has been all over the news after its big announcement to acquire Afterpay, a ‘buy now, pay later’ solutions provider in a $29 billion all-stock deal. The company’s acquisition of Afterpay is possibly one of the largest fintech deals in recent times and is taking place as a result of the management’s bid to boost Square’s Seller offerings and Cash App ecosystem as well as expand into Afterpay’s client base in Australia, New Zealand, and the U.K. markets. Before this big acquisition announcement, Square reported a decent result with revenues driven by strong momentum across the Cash App ecosystem which added $3.33 billion to the top-line implying a growth of a staggering 177%. Bitcoin alone was responsible for revenues of $2.72 billion, up more than 10 times as compared to the 2020 numbers. The quarterly Gross Payment Volume (GPV) of $42.8 billion was up by 88% as Square continues to penetrate more and more merchants and also popularize the Cash App which solely contributed $4.1 billion to the GPV. Rising bitcoin prices and an increased interest in crypto transactions and trading is benefitting the company. We are bullish on Square and give it a ‘Buy’ rating with a revised target price.