Square Inc. (SQ) has faced a series of challenges that have negatively impacted its stock performance. These challenges include the abrupt departure of CEO Alyssa Henry and concerns over the company's Q2 2023 earnings release. Despite beating revenue and earnings expectations and raising full-year guidance, investors were concerned about slowing growth, particularly in July when gross profit growth decelerated from 27% to 21% year-over-year. The macroeconomic environment, with high-interest rates, also added to the stock's decline, as it questioned Square's once-rich forward valuation multiple.
Citigroup analysts suggested that SQ stock might remain rangebound until year-end but could potentially recover to $65 per share once the company addresses its issues and regains its momentum. However, the future of the stock will depend on the results of Block's September quarter earnings release, as continued challenges may cause the stock to trend lower.
I get that the whole fintech sector is down because of the French company. What I don’t get is why a company that has 3% of its revenue coming from European markets falls much harder than a company that has 18%, Paypal.
I have also owned some small-cap fintech stocks, and trust me, compared to SQ, they have performed better when the whole fintech is down. Stocks like HIVE, SOFI, and OLB have given me a decent return as compared to SQ.
OLB is worth just $10.63 million in the stock market, but it made nearly $31 million in sales last year. The financial results for Q2 2023 were positive, with greater adjusted EBITDA and sales in line with the previous year.
Whereas SoFi Technologie had a 37% increase in total net revenue, reaching $498 million. Strong growth in personal loan originations led to net interest income (NII) more than doubling to $291.1 million in the quarter ending in June, surpassing analyst estimates.
SQ needs to hurry up and do a better job of connecting the ecosystems. They've been talking it up now for well over a year, and still, there has not been huge progress in terms of surfacing local square merchants in the cash app and incentivizing more purchases with those merchants either through cash card or through after-pay.
But consumer spending is high. Crypto is on the move. This should beat estimates. If it beats big, this can shoot up 20% easily. IMO
Leave a Reply