Square's Bitcoin Feature Could Secure An 'Early Mover Position'

Please welcome the latest bitcoin bandwagoner, Square Inc SQ.

The financial technology firm is piloting a feature on its Cash platform to facilitate the buying and selling of the cryptocurrency coin, according to a Tuesday TechCrunch report. Analysts consider the fintech disruptor well-suited to lead the industry in crypto-based innovation.

The Rating

Credit Suisse analyst Paul Condra maintained a Neutral rating on Square with a $31 price target.

The Thesis

Although the full impact is uncertain, Square’s step into bitcoin could lend a boost to both the firm and the industry it’s transforming, Condra said. (See Condra's track record here.) 

“We believe it could place SQ in an early-mover position as a mainstream fintech company providing cryptocurrency services,” the analyst said in a Wednesday note. “SQ is aso well-positioned to enable crypto transactions at the physical point of sale.”

The opportunity presents new risks, particularly surrounding regulation, liquidity and counterparty cooperation, but Credit Suisse considers the opportunity potentially significant for both Square and rival Paypal Holdings Inc PYPL.

“Despite these risks, the upside could be significant if cryptocurrencies become more mainstream,” Condra said. 

Price Change

Square popped 3.9 percent premarket off the report and, at the time of publication, was trading up 2.71 percent at $40.81.

Related Links:

Juniper Research Thinks There Will Be $1 Trillion In Crypto Transaction Value By Year's End

4 Opportunities in Square's Future That Make It A Buy

Photo courtesy of Square.