Analyst: Square Card Could Add $100M In Annual Revenue

Square Inc SQ is off to a hot start to 2019, but one analyst says there’s plenty more upside potential for long-term investors.

The Analyst

KeyBanc analyst Josh Beck reiterated his Overweight rating and $100 price target for Square.

The Thesis

The new Square Seller Card can eventually hit $100 million in annual revenue on its own if it continues along its current growth path, according to Beck.

“The Square Card offers sellers a business spending card and the capability to easily categorize business and personal expenses with limits capped by sales,” Beck wrote in a note.

He said roughly 40 percent of small businesses don’t have a business card, and the new Square offering taps a large unmet market need. A large, underserved market of small businesses, an innovative product, and a clear path to distribution could ultimately result in much higher adoption rates and revenue growth than the market realizes, Beck says.

KeyBanc projects the Square Card could hit $100 billion in gross payment volume and $100 million in annual revenue by 2022. As a result, Beck raised his 2020 Subscription and Services-based revenue target from $1.390 billion to $1.431 billion, growth rate approaching 50 percent.

Overall, Beck says the long-term bullish thesis for Square will hinge on its ability to leverage its success in payments to grow into a larger role in global commerce. The Square Card for small businesses is just one of the many steps the company is taking to expand its reach.

Price Action

Square traded around $74.91 per share Tuesday and are up more than 30 percent in 2019.

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Photo courtesy of Square.