Analyst Sees Square Hitting $300 On The Back Of Bitcoin-Heavy Cash App

Mizuho analyst Dan Dolev has upped his price target for Square Inc SQ stock from $225 to $300 as the company’s Cash App digs into geographies where PayPal Holdings Inc PYPL enjoys popularity.

What Happened: Dolev analyzed Google search trends to theorize that Cash App searches are growing in densely-populated states, MarketWatch reported on Saturday.

As of April this year, Cash App reportedly accounted for 60% of searches, while in 2017 and 2018 it made up for nearly 40% of searches for either Venmo or the Cash App.

Dolev is also positive about the Cash App broadening its monetization strategy. In the past, most of its profits came from users paying a fee to transfer money out of the app. 

The fee made up for only 54% of gross profit in the latest quarter, while there is an increased shift towards the company’s Cash Card debit card and its Cash App business platform, for which businesses pay a fee, according to Dolev’s estimates.

Dolev is upbeat on Square’s new customers lapping up revenue-generating features. In 2018, the company added 8 million users that generated $8 of gross profit per user, which grew to $22 in 2019.

Why It Matters: While the Cash App is more popular in southeastern states, Venmo is more popular among users who live in coastal states such as New York and California, noted MarketWatch.

This month, Square said its Bitcoin revenue spiked 1100% in the third quarter over the same period last year.

Bitcoin revenue accounted for nearly 80% of the Cash App’s $2.07 billion in revenue.

Cash App’s Jack Dorsey-led parent invested $50 million in Bitcoin in October, which JPMorgan dubbed as a “strong vote of confidence for the future of Bitcoin.”

Price Action: Square shares closed 2.25% higher at $195.97 on Friday.