Square Continues to Perform, Has “Many Different Ways to Win”

Ahead of its quarterly earnings report next week, leading payments company Square is popping up a lot in the investment press.

First came the news that a Credit Suisse analyst had upgraded the rating for Square to “outperform” and raised its price target to $81.

CNBC quoted the analyst, Paul Condra, as telling clients, “Square’s evolution from a payment company to a differentiated consumer and merchant services platform increases our conviction that the company can extend its business well beyond micro-merchants to include SMB and middle-market companies.”

Analysts appear to believe there is still plenty of room for Square to grow, since it has demonstrated the ability to move beyond its beginnings as the company that enabled electronic payments for small and micromerchants. The CNBC article also quoted UBS’ Erin Browne, head of asset allocation, on the company’s growth potential.

“They’ve only really breached 1% of the addressable market right now…There is a big opportunity here especially as they start to pivot in other areas,” Browne said on one of the network’s shows.

Rick Oglesby, president of AZ Payments Group, doesn’t dispute this notion. “Certainly, Square’s addressable market is very large considering its success in adding new products such as Square Capital and Caviar and up-selling those products to its merchant base, its success in retaining and selling to larger customers, its penetration into consumer markets via Square Cash, and its ability to scale globally,” he told PaymentFacilitator.

“It may well be just scratching the surface. It has many different ways to win going forward, and a strong track record of winning in the past,” Oglesby said.

If there’s any lesson other payment facilitators can take away from Square, that’s it, Oglesby said – a reason software companies consider taking on payments as PFs: “The big thing to learn from Square is that a strong business foundation has multiple ways to win,” Oglesby said.

In addition to the stock performance, the news that Snapcash – which Snapchat offered users in partnership with Square – was shutting down was also received positively by Square watchers. Seeking Alpha quoted analyst Condra as saying Square is better off with one less front-end competitor to its Square Cash product, despite losing the partnership on the back end.

Oglesby agreed. “SnapCash wouldn’t shut down if it was successful, so that shouldn’t significantly affect Square’s business,” he said.