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SQ STOCK WRITE UP


SQ (SQUARE INC)

  • P/E: N/A
  • GAAP DILUTED Y-O-Y EPS GROWTH LAST QUARTER: $0.25
  • SECTOR: TECHNOLOGY SERVICES
  • ASSETS-LIABILITIES: 1.5
  • DIVIDEND: none

Square Inc is the company behind the popular cash app, Square Cash. Square Cash's largest competitor is Venmo. Square's main business, however, is in its subscription segment, which provides business services, primarily to the food industry.
Square increased its revenue on a year-over-year basis by 21% in the 1st quarter, driven by a 100% increase in subscription revenue, and partially offset by a reduction in hardware revenue. Square's only hardware product is its chip readers. Additionally, the company spent 40% less on “general and administrative” costs due to a one-time, $50 million expense suffered in the comparable quarter last year; despite an increase in their 'product development', and 'sales and marketing' budgets, they saw reduced operating expenses of approximately 10%. All factors considered, the company cut their Q1 2017 operating loss to less than 1/3rd of their operating loss in the comparable 2016 quarter. Inventory has stayed largely stable in this time frame. The company increased its cash pile by nearly 90% on a year-over-year basis.
Jack Dorsey is Square's Owner and CEO. He is widely known for founding Twitter, and he co-founded Square. Dorsey started his first business in dispatch routing for taxis in 2000. Twitter has declined in share price since its IPO. Founded in 2009 and launched in May 2010, Square went public 11/19/2015. In 2014, they acquired the company Caviar, which is a food delivery company comparable to grubhub, and initiated a business financing segment. In 2015, The company opened their namesake Square Cash App to business-to-business transfers, and in 2017, the business came to the UK.  Square contends that it offers a lower per-swipe credit card transaction rate than its competitors at 2.75%. Its largest competitor in mobile-to-mobile money transfers is Venmo, a company owned by Paypal. Overcoming Venmo and Paypal will be difficult in the growing money transfer market; however, both Venmo and Square offer person-to-person money transfers for free, so the company's business services are of greater importance to revenue, profit, and expectations of profit.
Square has acquired and developed segments designed to provide total services for businesses, specifically in the food industry.  Square Capital is designed to help fund businesses, Square Register to collect money, Square Caviar to deliver food, and Square Payroll to pay employees. Unlike its cash app, Square collects revenue from all of these services.
The share price has grown rapidly despite the company not yet being profitable. Square expects to post its first positive EPS in Q2 2017. In Q1, Square missed its guidance of $.01, while still beating Wall Street expectations of -$.08. Square is valued solely on expectations currently, meaning that if it fails to meet expectations set by itself in the next quarter, share price could consolidate. However, if Square continues the trend of high EPS growth it has displayed over the last 3 quarters, expectations may continue to drive the company higher.











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