SQ stock surged higher on July 1, 2020, on a flurry of bullish analysts actions over the last few days.
MoffettNathanson analyst Lisa Ellis raised the firm’s price target on Square to $120 from $90 and keeps a Buy rating on the shares. Square closed at $105 on Monday and is up 68% year-to-date. While Square’s core Seller business is in “rough” shape amid the COVID-19 pandemic, Square’s wildly-popular consumer digital banking product Cash App is driving more than half of Square’s valuation, Ellis tells investors in a research note. At scale, the analyst believes Cash App will generate about $5B in annual revenue, $2B in EBITDA, and roughly 60M total users generating $85-$90 of ARPU.
Rosenblatt analyst Kenneth Hill upgraded Square to Buy from Neutral with a price target of $121, up from $69. The stock closed Tuesday up $1.26 to $104.94. The analyst sees the company’s Cash App revenue increasing by more than three times over the next five years. Further, the stock’s downside risks is limited with investors using recent pullbacks to gain exposure to this “long-term disruptive force,” Hill tells investors in a research note. As Square develops monetizes new services across the payments and financials ecosystems, it will” lay the groundwork to make the company a need-to-own name for years to come,” says the analyst.
On June 30, 2020, JMP Securities analyst David Scharf initiated coverage of Square with a Market Perform rating as part of a broader sector research note. The analyst is citing benefits from an “expanding payments ecosystem which is seeing merchant processing evolving to include personal lending, small business lending, money transfer, B2B payments, loyalty services, and credit analytics,” also noting that Square offers a disruptive business model, the expansion of its consumer payments offerings, and “industry-leading” growth.
On June 29, 2020, KeyBanc analyst Josh Beck raised the firm’s price target on Square to $125 from $70 and keeps an Overweight rating on the shares. The analyst sees FinApps as one of the purest beneficiaries of his Digital Acceleration thesis as consumers increasingly look to receive, spend, send, save, and borrow money with mobile-native, digital-first applications.
On June 24, 2020, Square announced the availability of On-Demand Delivery for Square Online Store. With On-Demand Delivery, Square Online Store sellers can dispatch a courier through delivery partners for orders placed directly on their website.
Wally Sadat, CMO of The Kebab Shop, a local chain of restaurants in California and Texas, has been using On-Demand Delivery for Square Online Store during our beta test and said it helped him manage costs and retain customers during recent months. “This new feature helped us keep our doors open and continue serving our customers during the recent downturn,” he said. “The ability to customize delivery limits and costs to our customers was especially powerful, as it helped us remain competitive at a cost our business can afford.”
Traditionally, to enable delivery most sellers list their menu on food delivery platforms because the restaurant doesn’t have their own couriers. This approach is often expensive because these platforms charge a commission to fulfill the delivery for each order. With On-Demand Delivery for Square Online Store, sellers can take control of their fulfillment process by offering delivery to their loyal customer base directly from their own website.
When an order is placed on the seller’s online store, a courier from the restaurant’s delivery partner is dispatched to the business location, picks up the order, and delivers it to the buyer. The buyer receives text updates with links to live maps to track delivery progress. Sellers pay a flat fee of $1.50 per order to Square, plus a fee to their delivery partner that is calculated in real-time based on distance and other factors. Sellers can pass this fee entirely to the buyer or offer custom delivery promotions. When applied across hundreds of delivery orders each month, sellers can save a significant amount on per-order costs.
Additionally, when buyers place an order through Square Online Store, sellers receive their contact information in the Square Customer Directory and are able to maintain sales history for those customers. When paired with other products like Square Marketing and Square Loyalty, sellers can strengthen customer relationships, create open lines of communication, and incentivize patrons to keep coming back.
Sellers can get started with On-Demand delivery powered by Postmates now, with additional delivery partners coming soon. Processing is free on all on-demand delivery orders through July 8, 2020—up to $50,000 in sales. Plus, Square is also waiving dispatch fees until July 1, 2020. Full terms and promotional details are available here.
On-Demand Delivery is just the latest feature Square has built to help sellers take their business online. Every business has different needs, and by using Square Online Store, sellers can fulfill orders however it makes the most sense for their operation – whether that’s via curbside pickup, shipping, local seller powered delivery, or working with delivery partners.