Square (SQ) is a stock to keep an eye on. It recently got downgraded after an analyst essentially concluded that Bitcoin’s recent rise posed risk to Square.[1]

In other words, yet again a crypto related stock has seen a sell-off because some Wall Street person decide that crypto going up was somehow a bad sign (this for example also happened to AMD, was the case with Andrew Left’s GBTC prediction, and was the case with Jamie Dimon’s now laughable Bitcoin FUD).

So far Wall Street has been dreadfully wrong on all things crypto, thus, you might want to keep an eye on a good entry point for SQ.

TIP: This isn’t investment advice. This is calling your attention to the downgrade of the stock SQ and the opportunity such a thing presents for those who want to put aside the FUD and focus on the potential future.

What is Square? Square is a digital payment company headed by Twitter founder Jack Dorsey that has started to embrace crypto (flirting with letting people buy, sell, and use Bitcoin). You know when you go to a business and the swipe your credit card through an iPad, that is often a Square product. In the future you’ll likely be able to use crypto for this, so the payment method may change, but SQ will likely be in the middle of the global market in any case.

The thing is, if you are of the mind that cryptocurrency isn’t risky long term, but is instead think it is bound for great heights (such heights that we will have Jamie Dimon eating his words and John Mcafee eating his… um) then you could argue that Square is a good pick and is essentially on sale a this point (at $40 or so; but even better if it goes into the $30s).

In other words, while others flee from the stock, you might want to be looking for an entry point to start averaging in cautiously and conservativly.

We had essentially offered the same insight with AMD. AMD had a great earnings report, but FUD of crypto caused everyone to panic and sell.

Our general suggestion is the same in both cases, if your reaction to the fear that GPU mining or digital payment systems are somehow going away is to do a belly laugh, then you might want to keep any eye on a good entry point for SQ and AMD and ignore the panic.

It isn’t that AMD was the best pick thus far, and likewise it isn’t to say that SQ doesn’t have more room to drop, it is simply that finding the right entry point (especially for long cryptocurrency related holds in your 401k or IRA) is an attractive prospect in the face of what some might say is rather unwarranted and almost silly FUD.

There are more considerations that led to the downgrade, but the panicked sell-off seems to have more to do with people being spooked over good news (like with AMD) rather than being a reaction to bad news.

Look, if Jamie Dimon is right, and its all a fraud, then SQ likely has a few challenges ahead.

Meanwhile, if SQ and AMD become industry leaders over time as cryptocurrency takes the world by storm over the next decade. There are worse plays than having those potential giants in your portfolio. I personally put my money where my mouth is, that is, I’ve been holding both and will buy more if they dip further.

That said, expect SQ especially to shed more weight first to be on the safe side. The analyst put an absurdly bearish $30 price tag on SQ, right now we are around $40. The analyst says $30, the charts hint at $40, but who knows (that is why averaging into the position is a good idea).

I can’t tell you what the right move for you is, but if you didn’t know about the news, now you do. Good luck doing your own research and making your own investment choices. You’ll note we aren’t saying what to do, and we aren’t suggesting you bet the farm, we are to the point of the title “suggesting you keep an eye on SQ if you have your eye on crypto as a long term bet.”

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Citations

  1. Analyst says bitcoin can’t save Square’s ‘overdone’ rally, shares fall 11% after downgrade

What do you think?