Square (NYSE:SQ) continues to enable the small business market with low-cost transactions. And why the company issued a growth forecast that is below consensus, the business is still set to take on bigger players for the long-term.
Square reported operating expenses increasing ~52% to $383.2 million. This is typical for a firm that continues to invest in its long-term, as sales and marketing, and development costs, add to the future growth of the company.
BTIG felt otherwise. The firm reiterated a 'sell' rating on the stock despite Square’s revenue growth forecast of $472 million - $482 million, or up in the 40% range. For the year, Square expects EPS in the $0.74 - $0.78 range.
Strong Business
Square continued to acquire new sellers efficiently. It will continue to spend on building tools that sellers will in turn use to grow their business. The firm reported positive adjusted revenue retention across its seller base. This trend will continue throughout the year.
Subscription and services-based revenue is one data point that stands out. At $194 million in the fourth quarter, revenue grew 144% year-on-year.
Takeaway
With 21 analysts covering SQ stock and a price target of $81 (according to tipranks), Square’s recent $77.46 closing price suggests little upside ahead. Investors may want to wait for the selling pressure to ease before starting a position.
