Square (SQ) - Get Report traded higher on Tuesday on talks that the technology and credit card payments provider was wading into commercial and retail banking with plans to offer checking and savings accounts.
Square shares were up 2.5% following a Bloomberg report that hidden code referencing the accounts had been discovered in a recent update to Square’s app for Apple's iPhone and iPad.
The company calls the new products “Square Checking” and “Square Savings,” according to the code. The code references both types of accounts and indicates that the checking version will integrate with Square’s existing debit card for businesses.
Tigress Financial analyst Ivan Feinseth recently reiterated his buy rating on Square and set a $295 price target on expectations that Square is well-positioned to benefit in the post-pandemic economic environment.
“SQ’s innovative capabilities will continue to drive the introduction of new products that take it beyond payments and continue to drive growth, increasing Return on Capital, greater Economic Profit, and accelerating shareholder value creation,” Feinseth noted in a recent research note.
TheStreet founder Jim Cramer and his Action Alerts Plus team believe Square competitor PayPal (PYPL) - Get Report is likely in better position to benefit from the next wave of digital banking innovation, thanks to the introduction of a digital wallet “Super App” combined with other offerings.
"We think the presence of this app, which launches in the third quarter of this year, serves to make PayPal's offering more competitive versus Square's Cash App while also providing for increased user engagement and therefore monetization opportunities over time,” the AAP team said.
Other plans in the works including buy now, pay later and in-store payment options “… will serve to sustain, if not accelerate, the strong growth that the company is seeing while making them more competitive versus competitor Square, which trades at a significantly higher valuation (over 2x on a p/e) basis.”
And PayPal is already in the crypto business. Last month, PayPal’s Venmo unit opened its service to buying, selling and holding cryptocurrency directly within the Venmo app with as little as $1.
At last check, Square shares were up 2.49% at $216.14. The stock ended the trading day Monday up 5.43% at $210.95. Shares of Paypal were up 0.44% at $258.30.