Andrew Left’s Citron Research has said that the excitement surrounding payments processor Square’s Bitcoin trading product was “overdone.” Labeling Square a “collection of yawn businesses,” Citron tweeted its opinions on April 30, 2018, and sparked an immediate debate on social media around the issue.
Citron’s Price Target Well-Informed
The tweet reads in part: “Wall St. drunk on Bitcoin nonsense. SQ-Cash to BTC trading has been insignificant. Even w/ hyper growth still 40 [percent] too rich.” Square stock momentarily shed 3.8 percent to $45.76 a share after the post, before making back almost all of its dip to close 0.48 percent lower on the day.
(Source: Trading View)
Citron also issued its short-term target price of $30 for the stock, or 36.9 percent below the close on April 27, 2018. The Square share price has changed little since former Twitter co-founder Jack Dorsey offered Bitcoin trading in January 2018 to most of the company’s Cash mobile-payments app users.
Pointing to the multiplier effect that Bitcoin can have on any business that jumps on board, Left insists that this is the reason for such optimism around Square, but that the core value analysis paints a different picture.
Bitcoin’s unimaginable rise during 2017 has enthused a host of startups to capitalize on what they see as massive support for the digital currency. Left, however, is scrutinizing some of the surrounding service offers, including Square, and feels that there is still too much hype on the issue. This enthusiasm makes it challenging to come to a reasoned conclusion on the true value of the coin and the businesses that have capitalized on it.
In contrast, research analyst at Nomura Instinet, Dan Dolev, said that he feels the “Bitcoin impact will be material, long-term.” As opposed to Citron Research’s analysis, he raised the price target for Square stock to $65 on April 18, 2018. Dolev is basing his target on the fact that the launch of Bitcoin trading by Square should add to adjusted earnings before interest, taxes, amortization, and depreciation, and he is predicting this upswing to pan out an increased revenue of around ten percent.
Cryptocurrency Srading Still a Volatile Space
Although Nomura Instinet has industry credibility and is adopting a different stance from which to analyze the current markets, Citron’s is also a reputable voice, and commentators are divided on the issue of a legitimate share price for Square. Spiking to just under $20,000 in December last year, the Christmas madness around the pioneer cryptocurrency has abated, and although those formerly giddy highs are over, the coin remains massively up year on year.
Bitcoin traders have so far managed to avoid such considerable slumps in 2018, and new sobriety permeates the trading floors. Regulators are settling into their comfort zone with a handle on virtual currencies and users are starting to see the utility behind cryptocurrencies, rather than the potentially ridiculously profitable assets they were treated as during 2017.
Square shares are up 34 percent for the 2018 year to date. Bitcoin was trading around $9,300 on April 30, 2018. The coin is still a remarkable 570 percent up over the last 12 months of trading.