Investing in Square today is like buying JPMorgan in 1871 as the payment company’s Cash App realizes its growth potential, Mizuho says

Stock trader
Peter Tuchman, right, works among fellow traders at a post on the floor of the New York Stock Exchange, Wednesday, March 4, 2020.

  • Buying shares of Square today is like investing in JPMorgan at its founding in 1871, Mizuho said in a note on Thursday.
  • Mizuho believes Square’s Cash App will become the ultimate neo-bank and money center bank of the future.
  • The firm rates Square as a “Buy” with a $380 price target, representing potential upside of 59%.
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Square’s Cash App has so much upside potential that buying shares in the fintech company today is anagolous to investing in JPMorgan at its founding in 1871, Mizuho said in a note on Thursday.

“We believe Cash App may be en route to becoming the ultimate neo-bank and the money center bank of the future,” Mizuho said.

The firm sees a visible path for Cash App products to more than quintuple its average revenue per user to $200, and estimates the money sending app can capture a large portion of the US bank account total addressable market of 400 to 500 million accounts, according to the note.

Mizuho estimates that Square’s Cash App currently has between 30 and 40 million users, and that legacy banks like JPMorgan and Wells Fargo generate average revenue per user between $400 and $700, implying lots of upside potential for Square’s growth trajectory.

“With vast potential upside to average revenue per user and users, we believe Cash App’s gross profit could see 4x-8x growth over the coming years,” Mizuho explained, adding that it views Cash App as the “ultimate challenger bank.”

The product fronts Mizuho expects Square to tackle (and dominate) over the coming years includes retail crypto and stock trading, buy-now-pay-later, insurance, mortgage and auto loans, and tax services, among others, according to the note.

While the comparison between Square and JPMorgan in 1871 makes for a good headline, it’s worth noting that the predecessor to America’s largest bank didn’t go public until 1942.

Mizuho reiterated its “Buy” rating on Square and set a price target of $380, representing potential upside of 59% from Wednesday’s close. Shares of Square were down about 1% in Thursday trades, and are up 8% year-to-date.

Square's Cash App analysis
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Jack Dorsey’s Cash App partnered with Megan Thee Stallion so the rapper can give away $1 million in stock

Megan Thee Stallion
  • Megan Thee Stallion partnered with Cash App to give away $1 million in stock as part of a financial literacy campaign.
  • The popular artist also released an investing tutorial on Youtube called “Investing for Hotties.”
  • Megan Thee Stallion previously gave away $1 million of bitcoin on Cash App.
  • See more stories on Insider’s business page.

Megan Thee Stallion, the popular artist known for her mega-hits WAP and Savage, wants hot girls everywhere to learn how to invest.

In partnership with Cash App, Megan Thee Stallion is giving away $1 million worth of stock to random winners. Users on Twitter have posted screenshots of $10 Cash App transfers of stocks including Peloton, Microsoft, and Netflix. You can enter by commenting your Cash App username, known as a $cashtag, on this tweet.

The #CashAppForHotties social media campaign is one installment in a longer series of financial tutorials. “Investing for Hotties,” the first video of the series, walks viewers through financial terms like dollar-cost averaging and diversification.

“Buying stocks isn’t only for the big players,” the rapper said in her first tutorial. “Anyone can start with as little as $1. Putting in a little money and seeing how it moves is a great way to learn about the stock market.”

“The more you educate yourself the more equipped you’ll be to navigate investing,” she added.

Fellow celebrities like Miley Cyrus have announced similar giveaways with Cash App in the past. Last year, Megan Thee Stallion sent out $1 million in Bitcoin on the app.

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Jack Dorsey’s Square reports Q1 bitcoin revenue grew 1,000% to $3.5 billion – and is the 3rd-largest corporate holder of the cryptocurrency

Jack Dorsey
Jack Dorsey.

  • Square’s bitcoin sales volume surged 1,000% year-on-year in the first-quarter, the company said.
  • Overall revenue was $5.06 billion, handily beating analyst expectations of $3.37 billion.
  • Jack Dorsey said Square views bitcoin as “the internet’s potential to have a native currency.”
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Square reported first-quarter earnings that beat analyst estimates on Thursday, powered by surging demand for bitcoin.

Quarterly revenue from bitcoin grew eleven times to $3.5 billion, from $306 million a year ago, the company said in a shareholder letter. But gross profit from these transactions were only $75 million, or about 2% of bitcoin revenue, making up Square’s fee generation from sales.

Square profits from transaction fees that customers are charged with when they buy or sell cryptocurrencies on its platform, which is smaller in comparison to revenue generated.

cash app
Square’s Cash App.

Overall quarterly sales for the digital-payments firm came in at $5.06 billion, beating analyst forecasts for $3.37 billion. Net income for the quarter was $39 million, or 8 cents per share. Gross profit more than doubled by rising 79% year-on-year to $964 million.

Screenshot 2021 05 07 at 08.41.40

The company announced a boosted bitcoin stake in February, having invested an additional $170 million. That accounted for about 5% of its total cash, cash equivalents, and marketable securities.

With that investment, Square bought an additional 3,318 bitcoin at an average price of $51,235.68. It had bought 4,709 bitcoin for $50 million in October 2020, currently worth about $263 million.

Square now holds 8,027 bitcoin, according to bitcointreasuries.org, worth about $448 million. That makes it the third-largest publicly-traded holder of the digital asset after MicroStrategy and Tesla.

“We see bitcoin as the internet’s potential to have a native currency, and we want to further that as much as we can.” CEO Jack Dorsey said during an earnings call. “Our focus is enabling bitcoin to be the native currency. It removes a bunch of friction for our business, and we believe fully that it creates more opportunities for economic empowerment around the world.”

Square counted more than 10 million monthly active users of its Cash Card in the quarter. About seven million active users, on average, used its Cash Cards every week in March.

Square’s shares rose 2.5% to $229.55 per share in pre-market trading on Friday.

Bitcoin was last trading 1% lower on Friday, at around $55,800 per coin, but is up 89% so far this year.

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How to receive money on Cash App by requesting or accepting payments

friends eating at restaurant looking at smartphone
With Cash App, you can quickly send money to friends, like when you need to split a check.

  • You can receive money on Cash App by accepting a payment or sending a request.
  • To get money from Cash App to your bank account, you need to “Cash Out.”
  • Before you can start, you need to have your bank account linked to the app.
  • Visit Insider’s Tech Reference library for more stories.

Square’s Cash App is a mobile peer-to-peer payment app, like Venmo, that allows you to transfer money to family and friends without even having to be in the same room.

Cash App makes it convenient to split things with friends, too, from pizzas to hotel rooms.

Receiving money on Cash App is as simple as sending a request, or approving a payment. You just need to link your bank account to the app so you can get your money right away, or “cash out.”

Here’s what you need to know.

How to change your Cash App PIN on an Android or iPhoneHow to increase your Cash App transaction limit by verifying your accountHow to receive money on Venmo and transfer funds to a connected bank account‘Can you send money from PayPal to Cash App?’: Not directly, but you can use your bank account – here’s how

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How to send money on Cash App on your iPhone or Android

customer on smartphone at cafe
Cash App makes it easy to send money no matter where you are.

  • You can send money on the Cash App if you know the recipient’s phone number, email, or $cashtag.
  • To use Cash App and send payments, you need to first link your bank account to the app.
  • When you allow Cash App to access your contact list, it’s even easier to find friends or family.
  • Visit Insider’s Tech Reference library for more stories.

Cash App, similar to Venmo, is a simple smartphone app that lets users transfer funds to friends or family with just a few taps.

Once you’ve linked an active bank account, you can begin sending, receiving, and requesting money on the app. Here’s how to use Cash App to send money.

How to receive money from Cash App in 2 different ways‘Can you send money from PayPal to Cash App?’: Not directly, but you can use your bank account – here’s howHow to change your Cash App PIN on an Android or iPhoneHow to increase your Cash App transaction limit by verifying your account

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Bitcoin surges back above $51,000 after Square’s $170 million investment, Cathie Wood’s positive comments

A multiple exposure image shows a Bitcoin logo displayed on a smartphone with stock market percentages in the background
A multiple exposure image shows a Bitcoin logo displayed on a smartphone with stock market percentages in the background

Bitcoin rebounded on Wednesday, climbing back above the $50,000-level after a sharp selloff to start the week. 

The world’s largest cryptocurrency by market capitalization jumped Wednesday on news that payment firm Square purchased an additional $170 million worth of bitcoin, as well as Ark Investment Management CEO Cathie Wood’s bullish comment on the digital token.

Bitcoin around 4AM ET on Wednesday jumped 7.5% to a price of $50,683, according to data from Coin Metrics. It edged even higher to $51,369 hours earlier. Other cryptocurrencies from ether to XRP were also up early on Wednesday.

As of 8:42AM ET, bitcoin was trading higher by 1.47%, to $49,536.87.

Bitcoin plunged on Monday and Tuesday, tumbling to as low as $45,000. But bitcoin advocates such as Wood told Bloomberg Radio that she remains bullish on the digital asset.

“We’re very positive on bitcoin,” she said, adding she was “very happy to see a healthy correction here. No market is straight up. Everyone should know that.”

Meanwhile, Square during its earnings call on Tuesday announced that it purchased 3,318 bitcoins at an aggregate purchase price of $170 million. Bitcoin now represents about 5% of the company’s total cash, cash equivalents, and marketable securities as of the end of last year. Square in October 2020 purchased 4,709 bitcoins for $50 million.

“The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis,” the company said.

Like Wood, bitcoin bulls remain unfazed by the cryptocurrency’s price fluctuations.

“We may be seeing some price fluctuations that can be expected in a nascent space,” Paolo Ardoino, Bitfinex CTO, told Insider. “Such criticism misses the point and the profound impact it is starting to have. For many of the battle-tested exchanges that have weathered the market fluctuations, volatility isn’t new and is to be expected in such a young market.”

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