Earlier this month, Square announced that a small number of users would have access to its bitcoin pilot program. Specifically, Square's Cash app now allows some to swipe over to a bitcoin page, where they can buy and sell bitcoin. Notably, they can't send bitcoin, which may seem surprising only because that's exactly what the Square Cash app was designed to do -- send money from one person to the other.
In an regard, Square stock had been soaring -- up almost 40% over the past month, 90% in the past three months and more than 250% so far in 2017. That is, until Monday. Shares continue to bleed, now down more than 10% to $43.70 after analysts at BTIG hit the stock with a sell rating.
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Analyst Mark Palmer made the case that the valuation for Square now reflects "emphatic and unimpeded growth," but does not include some of the risks that Square faces elsewhere. For instance, Clover -- a unit of First Data (FDC - Get Report) -- and Vantiv (VNTV) could present issues. Further, its macroeconomic and credit-related risks still exists, despite investors seemingly overlooking them thanks to the bitcoin move we mentioned above.
Palmer downgraded the stock from neutral and is using a $30 price target. From current levels, that represents more than 30% downside. However, it represents almost 40% downside from its previous close on Friday near $49.
While Square stock is off its lows near $43, it's still a brutal day to be long this momentum monster. It sports an all-time and 52-week high of $49.56, which feels a long ways away after Monday's decline.
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