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Square Shares Are Down 8.5% since April

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Square’s returns

Shares of mobile payment processing company Square (SQ) have fallen less than 8.5% since the start of April and are down 5.9% in May. The stock is currently trading at $68.52, 40% above its 52-week low of $49.05 and 32% below its 52-week high of $101.15.

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Square’s revenue guidance was below estimates

Square announced its first-quarter earnings results on May 2, 2019, and reported adjusted sales of $489 million, a rise of 59% YoY (year-over-year). Its adjusted EPS rose 83% to $0.11 in the first quarter.

Analysts expected the company to post revenue of $479.63 million with earnings of $0.08 in the first quarter. While Square beat revenue estimates by 2%, it beat earnings estimates by 37.5% in the quarter. So what drove Square stock down recently?

As we can see in the chart above, Square’s revenue growth has slowed in the last two quarters. Square expects its sales growth to slow in the upcoming quarters as well. Square is expected to post sales of between $545 million and $555 million in the second quarter, which represents potential growth of ~45%.

Square has posted net losses in four of the last five quarters, and a net loss could leave investors unimpressed considering its slowing revenue growth. However, Square is gaining traction among large sellers. The GPV (gross payment volume) from large sellers—those with GPVs of over $125,000—rose 37% in the first quarter and accounted for 51% of Square’s total GPV in the quarter, up from 47% in the previous year’s period.

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