Square’s value could 5x thanks to Afterpay deal: Pompliano

Published at: Aug. 4, 2021

Morgan Creek Digital co-founder and Bitcoin (BTC) proponent Anthony Pompliano thinks Square’s value could increase to $1 trillion following the firm’s acquisition of Afterpay.

Square, headed up by Twitter CEO Jack Dorsey, this week announced its acquisition of the Australian buy now pay later (BNPL) business for $29 billion on the same day it reported $2.7 billion in Q2 revenue from Bitcoin sales on its Cash App.

Pompliano analyzed the move on his The Best Business Show on Aug. 4, which was posted on his personal YouTube channel under the rather clickbaity heading “Square is going to be worth $1 trillion dollars.”

In the video itself, he was much more conservative in his estimates. In Pompliano’s view, he thinks that a two-to-five times increase in value is a real possibility for Square due to the combined potential of both firms. According to Yahoo Finance, Square currently has a market cap of $122.72 billion.

“If the integration goes well and if the combination of these two businesses works out the way that Square and Afterpay believe it will, it will create a very, very interesting business for Square to continue to expand globally and into other demographics,” he said.

Pompliano highlighted that Afterpay’s $29-billion valuation was on the back of 100,000 partnered merchants, and he emphasized that opening up Afterpay’s BNPL services to the 70 million users of Square’s Cash App, as well as the 2 million Square merchants, could see Square’s value skyrocket:

“You could effectively say 100K got you to a $29-billion valuation. If you roll it out to 2 million, maybe you don’t simply get a 20x the value of the business, but could you two, three, four or five X the business? Absolutely.”

Dorsey’s crypto-friendly payments firm Square announced on Sunday that it was acquiring Afterpay with Square common shares. The deal is expected to be paid out in the first quarter of 2022.

Following the announcement, Square’s stock (SQ) has increased by 8%, going from $248 on Friday to around $269 on Wednesday, while Afterpay’s stock (APT) has increased by 34%, moving from $95 Australian dollars to $128 AUD within that same time frame, according to data from TradingView.

Square also published a second-quarter report on Sunday that posted a 200% increase in Bitcoin revenue year-on-year (YoY) for Q2, with BTC services driving $2.72 billion worth of revenue for the firm. In Q2, Square’s total gross profit grew 91% YoY to $1.14 billion, and Cash App also generated a gross profit of $546 million overall, up 94% YoY.

It is unclear whether Afterpay will attempt to incorporate crypto services into its business model following Square’s acquisition. However, BNPL competitor Zip revealed in July that it is looking to offer crypto trading in Australia and the United States within 12 months.