Square Adds $8 Billion in Market Value Aided by Bitcoin
Square Inc., a California-based mobile payments company, has seen its stock price rise since the company begun offering bitcoin trading last November. Although bitcoin trading accounted for only about 5 percent of Square’s overall revenue in the first quarter of 2018, the company’s got off to a good start with seemingly more room to grow.
Square Stock Price Rally to Continue?
Square piloted bitcoin-related services last November, which were available to limited users on its Cash App at the time. In late January, the bitcoin payment feature was open to all U.S. customer and allowed users to send bitcoin to friends and family.
Looking back on Q1 2018, the bitcoin business led to Square pocketing more than $34 million USD in revenue. However, the payments company only netted $200,000 in profit from said busines, as the initial cost to purchase bitcoin from exchanges was $33.9 million. As reported on Bloomberg, Square’s stock price has jumped by half, adding $8 billion to its market value, since introducing bitcoin services on its Cash App last year.
The digital payments startup is expected to draw in more revenue in the second quarter from its bitcoin happenings. Square’s stock price rally has also sprung from mergers and acquisitions, the most significant being the Weebly deal. In April 2018, Square announced to acquire website-builder Weebly for $365 million in a bid to broaden its customer base.
Over the past few months, Square CEO Jack Dorsey has shown a rooting interest in bitcoin. At the time of launching bitcoin support on its Cash App, Dorsey said:
“We support bitcoin because we see it as a long-term path towards greater financial access for all — This is a small step,”
Weeks ago, Dorsey projected bitcoin becoming a single world currency. “The world ultimately will have a single currency, the internet will have a single currency. I personally believe that it will be bitcoin,” he said.
The Bitcoin ‘Boost’
According to institutional broker firm Nomura Instinet, Paypal’s Venmo app, a U.S.-only mobile payment service, is facing tough competition from Square after the latter added bitcoin trading feature to its services. Per Nomura analyst Dan Dolev, the Cash App is receiving added “boost” due to its facilitation of bitcoin services. In the rat race to push ahead, then, bitcoin is helping Square keep pace with Venmo.
As Dolev noted, the Cash app has seen a balanced growth.
“With Square Cash App now open for Bitcoin trading in most states, comparing its growth versus the popular Coinbase app is noteworthy,” he said. “Here, while Coinbase saw growth peak around the holiday time — as Bitcoin prices spiked — Coinbase’s growth has slowed from record levels, whereas Square Cash App experienced more balanced growth.”
Graphics processor makers Nvidia and AMD have both seen an uptick in their stock prices due to crypto fever as well. GPU demand had surged in recent years as they are now popularly used to mine cryptocurrencies. Recently, Nvidia reported that crypto sales accounted for 9 percent of its Q1 2018 revenue, equating to $289 million.
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