Square Stock Forecast 2025
As a financial technology company catering to small- and medium-sized businesses (SMBs), Square (NYSE: SQ) expectedly took a major hit near the onset of the COVID-19 pandemic last year as many SMBs were forced to temporarily close their doors amid broader shutdowns.
That was especially true for local retailers such as restaurants, which were hit especially hard and have only started to recover in recent months.
However, Square’s business rebounded in the third quarter of 2020 as SMBs scrambled to set up shop online and undertook digital transformations, which led to a surge in gross payment volume (GPV) for the mobile payments company. Like many growth-oriented tech stocks, Square soared last year, gaining nearly 250% in 2020.
Additionally, Square has been aggressively expanding into cryptocurrency offerings in recent years, as CEO Jack Dorsey is a prominent cryptocurrency advocate. Companies that embrace cryptocurrencies tend to have higher correlations with cryptocurrency prices, for better or for worse, as the digital asset class remains highly volatile.
The stock now trades around $247, or 345 times earnings. Wall Street analyst price targets range from a high of $380 to a low of $89, with an average price target of $273.
Price: $247.26 (as of close Jul 30, 2021)
Square Stock Forecast 2021
Thanks to the momentum that Square had built coming into 2021, the company is expected to enjoy stellar growth across the business this year. The good news for Square is that SMBs are unlikely to revert back to their old ways after embarking upon digital transformations.
The benefits around greater operational efficiency and other aspects of their businesses are simply too powerful and there’s no going back.
Square used to provide revenue guidance but suspended that practice last year due to the macroeconomic uncertainties related to the public health crisis, which remains ongoing in many markets around the world where Square operates.
Lacking top line visibility, the company now provides its estimates for certain expenses. Adjusted operating expenses this year are forecast to increase by $1 billion to $1.1 billion compared to 2020 levels, or 50% growth at the midpoint.
Analysts are bullish on Square’s prospects, modeling for revenue to soar by 115% this year to reach $20.4 billion. That performance is expected to translate into $1.51 in adjusted earnings per share (EPS).
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Square Stock Forecast 2025
Wall Street expects the top line to continue marching higher in the years ahead, albeit at a decelerating pace compared to the breakneck growth analysts are forecasting for 2021. Square’s revenue could grow by a compound annual growth rate (CAGR) of 11% if analyst models prove to be accurate.
Here’s how much revenue Square is expected to generate each year.
Adjusted EPS will grow at faster rates as Square’s operating leverage kicks in, which allows profitability to outpace revenue growth as margins expand.
|Year||Adjusted EPS||YOY Growth|
Square continues to expand its offerings in both its Seller ecosystem as well as the Cash App that can handle an increasing array of financial services for users, including cryptocurrency trading as well as merchant loyalty programs.
Square Stock Forecast 2030
Zooming out, Wall Street sees Square’s revenue approaching $40 billion by the end of the decade. Long-term models should always be considered with a grain of salt, since a lot can change over such a long forecast period. In particular, the broader fintech sector has been evolving rapidly and competition will only intensify from here.
With that in mind, here are analysts’ forecasts through 2030.
In terms of profitability, adjusted EPS could skyrocket by nearly 13-fold relative to the $0.84 in adjusted EPS Square posted for 2020.
|Year||Adjusted EPS||YOY Growth|
Square Bull Case
Square has done a remarkable job in creating a comprehensive ecosystem of services for merchants, allowing the company to target larger and larger companies. Mid-market sellers that process over $500,000 in annual GPV now represent the majority of GPV.
The company is prioritizing international expansion, recently launching Square Register in the United Kingdom and Australia and Square Terminal in Japan. International seller GPV is putting up strong growth despite regional lockdowns. Continued execution abroad will be a critical area for bullish investors to watch.
Square’s Cash App, which started initially as a peer-to-peer (P2P) payment service, is also developing into a full-fledged platform that can accept paycheck deposits, tax returns, and other features typically associated with traditional bank accounts. Users can now also invest in cryptocurrencies and stocks through the app.
If the Cash App continues to gain traction, Square has the opportunity to become indispensable to merchants and consumers alike.
Square Bear Case
The path to success won’t be easy though, as rivals are similarly innovating at a breathtaking pace. Competitors include large stalwarts like PayPal (NASDAQ: PYPL) as well as newer entrants like SoFi (NASDAQ: SOFI), among many others.
Square has defended its SMB niche well against larger companies who have tried to replicate the company’s success in mobile payments and merchant services, but the market for consumer apps seeking to become a one-stop shop for financial services is booming like never before.
SoFi has emerged as a particularly prominent competitor to the Cash App, as the competing app offers everything from loans to insurance and more.
With Square stock trading at elevated valuation multiples due to lofty investor expectations, the stock could be vulnerable to multiple contractions if its growth is called into question for any reason, such as competitive threats or volatility in the cryptocurrency market.