Afterpay deal could rocket Square 5X, says ‘Pomp’; Square posts 200pc Bitcoin revenue gain
Bitcoin bull Anthony Pompliano, co-founder of US hedge fund Morgan Creek Digital, believes Afterpay (ASX:APT) could help boost the value of Square (NYSE:SQ) by 5X, following the US payments giant’s acquisition of the Aussie BNPL success story.
Pompliano, or “Pomp” as he’s commonly known, made the comment this week on August 4 during The Best Business Show with Anthony Pompliano, which is part of his regular YouTube channel line-up. The original title for the video was “Square is going to be worth $1 trillion dollars”, although that’s since been changed.
“It’s a bet-the-company moment for Square,” said Pompliano, who, like Square and Twitter CEO Jack Dorsey, is a strong proponent of Bitcoin (BTC). Pomp is also a highly influential voice within crypto circles, regularly defending the digital asset on mainstream channels such as CNBC.
The hedge fund partner, who hosted the show in a hoodie with the slogan “trillionaire energy”, made the point that Afterpay’s US$29 billion valuation was made on the basis of 100,000 partnered retailers.
He claimed that exposing Afterpay’s services to 70 million users of Square’s Cash App, as well as a further 2 million Square retailers, could see the value of Jack Dorsey’s firm dramatically rise over time.
Pomp speculated that the Aussie BNPL (buy now pay later) company could help Square increase in value “maybe not 20 times… but two, three, four or five times”.
Square currently has a market cap of US$122.47 billion, so its Afterpay deal won’t quite energise it to the $1 trillion level with a 5X. Although if you’re converting it all to AUD, then Pomp’s more outlandish figure from his video’s original title gets a bit closer.
As reported by Stockhead this week, the merger of the two companies will be an all-scrip deal, meaning that all existing Afterpay shareholders will have the opportunity to swap their APT stocks for Square stocks, which will subsequently have a secondary listing on the ASX.
Pompliano said it seems like a “no brainer for the Afterpay folks”.
“If the combination of these two businesses works out the way that Square and Afterpay believe it will,” continued Pomp, “it will create a very, very interesting business for Square to continue to expand globally and into other demographics.”
In a statement about the merger earlier this week, Jack Dorsey, the CEO of both Square and Twitter, hinted that part of the reason for the Afterpay acquisition is because the Aussie-founded firm has an “inclusive and accessible” business model that aligns with Square’s. Pompliano said that Square is looking to leverage Afterpay’s swathe of “younger users in the consumer-lending space”.
Following the announcement of the merger, Square’s stock rose from about US$235 on August 2 to a peak of just over US$280 that same day. It’s currently sitting at $266.40.
APT:ASX, meanwhile, also had a huge surge this week, up about 22% in the past 5 days and presently resting at AUD$125.26. This is according to TradingView data.
Meanwhile, as reported by CoinTelegraph earlier in the week, Square published a second-quarter report that showed it’s made a 200 per cent increase in Bitcoin revenue year-on-year (YoY) for Q2, with its BTC-based services driving US$2.72 billion worth of profits.
In Q2, Square’s total gross profit grew 91% YoY to US$1.14 billion. The firm’s Cash App also generated a gross profit of $546 million overall, up 94% YoY.
As for Afterpay, it’s unclear whether it will join its Aussie competitor Zip Co. with any moves into the realm of crypto payments or trading services before its deal with Square is set to resolve early next year.
But, seeing how crypto payments have become such an important part of Square’s business model, it now seems inevitable that Afterpay will also be heading down the cryptoverse rabbit hole in one way or another.