Square Stock Pops on Afterpay Acquisition

Evercore ISI raised its price target in response

Deputy Editor
Aug 2, 2021 at 9:20 AM
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The shares of Square Inc (NYSE:SQ) are up 7.1% to trade at $264.05, amid news that the digital card payment company is acquiring Afterpay for $29 billion in an all-stock deal. The popularity of "buy now, pay later" and increasing preference for installment loans over traditional credit amongst young buyers has Square planning to integrate Afterpay into both its seller and Cash App. 

In response, Evercore ISI raised its price target to $361 from $353. There is plenty of room for more bull notes that could push the equity higher, too, given that 12 of the 31 analysts in coverage carry a "hold" or worse recommendation.

An unwinding of short interest could provide tailwinds as well, as it represents 8.2% of the stock's available float. In other words, it would take nearly four days to buy back these bearish bets, at Square stock's average pace of trading.

On the charts, Square stock is up an impressive 91.5% year-over-year coming into today. The $280 level has proved elusive though, after the shares' Feb. 16 record high of $283.19.

Options are an intriguing route, considering SQ's Schaeffer's Volatility Scorecard (SVS) rating currently sits at 89 out of 100. This suggests the stock has exceeded these volatility expectations during the past year -- a boon for premium buyers.


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