What to Expect from SQ Stock?
Wall Street has its eyes set on Square Inc (NYSE:SQ) stock as the company gears up to release its first-ever filing since going public in November.
The year 2015 wasn’t a very rewarding one for initial public offerings (IPOs). Most IPOs turned out to be duds. Worth noting are Fitbit Inc, Box Inc, and Pure Storage Inc. Square stock’s performance on the market has likewise been underwhelming.
The company is now due to report its fourth-quarter earnings after the bell today. We may not have an earnings history, but weighing its positives and negatives might help us determine the next move in Square stock.
Recall that Jack Dorsey’s dual CEO-ship at both Twitter Inc and Square has remained one of the prime reasons for investor skepticism. His divided attention for the company has kept prospective investors at bay.
At the same time, competition from industry heavyweights like Paypal Holdings Inc remains the biggest threat to the company. And with tech giants like Alphabet Inc and Apple Inc. now investing in the mobile payments industry, Square faces even stiffer competition.
Plus, Square may have been in business for nearly five years now, but it has so far failed to generate any profits. Its bottom line is still in the red. These cons certainly put off potential investors in SQ stock.
Yet, there are a number of silver linings that will shift your perspective on Square stock.
Square’s initial success in the U.S. cannot be underestimated. The company has already managed to pull in two million sellers to its payments platform and is continuing to add more. Its in-person and online payment solutions have made lives easier for both customers and merchants. The good thing is that Square is not restricting itself to the U.S. alone.
In fact, Dorsey has been working on Square’s expansion since taking it public in November. Until this week, Square had already made its way into two other markets: Canada and Japan. This week, it branched out into the Australian market. (Source: “Square Brings Mobile Payments to Australia,” Fortune, March 7, 2016.)
Bear in mind that “Apple Pay” made it to Australia last year. You might think that’s bad news for Square. You’re wrong!
The universal nature of Square’s point-of-sale (POS) devices makes them a more viable investment for merchants. This is because Square’s POS devices not only accept payments to their own platform, but they also accept payments from Apple Pay.
An even better reason why I’m optimistic about the company is that Square has managed to impress an industry bigwig enough to invest in the company. Interestingly, Visa Inc revealed a 10% stake in the company last month. In fact, rumor has it that Square might eventually get bought out.
The Bottom Line on SQ Stock
There’s no denying the fact that Square is facing some serious threats. However, one has to give it credit for managing to stagger forward despite raking in a lot of negativity.
Today will be a defining day for the company. The Street has a consensus expectation of a $0.22 loss per share from its latest quarter. If the company manages to beat it and Dorsey is able to deliver strong guidance, SQ stock could easily breach its post-IPO highs to gain new highs.
Now is a good time to put SQ stock on your watch list.