If Wall Street Likes Square, Why Is the Stock Falling?

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Square readerJack Dorsey-led payments company Square released its first earnings as a public company yesterday and although it did not disappoint, it just wasn’t enough to keep its stock from tumbling.

Square’s stock opened 7.86 percent lower today even after its  fourth-quarter revenues totaling $374 million beat analysts expectations hovering around $345 million. The San Francisco-based company proved to skeptics that its business is more than just payments with a convincing quarter.  The seven year old company that went public in November 2015, originated more than $400 million in merchant cash advances annually and over $150 million in the fourth quarter with an average deal size of $6,000 and its software and data business brought $58 million in annual revenue.

Square also processed $10.2 billion in payments from 2 million merchants in the fourth-quarter, at an annual increase of 47 percent. Square realized that the best way to retain consumers is to sell them more products without losing its core — payments. The company received 350,000 orders for the mobile point of sale chip reader which accepts payments on smartphones. “We want to associate our logo with the ability to pay with your phone,” said Jack Dorsey during the earnings call.

Square is confident that it has built a “cohesive commerce ecosystem” for merchants. Then why is the stock being punished?

Last modified: March 10, 2016

Category: Marketplace Lending, stocks

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