4 Factors For Square Investors To Consider Ahead Of The Q4 Print

As the latest earnings season winds down, Square Inc SQ is scheduled to report fourth-quarter results Wednesday afternoon.

Dan Forman of Olivetree Global outlined four factors for investors to consider in a note before Square releases its fourth-quarter print. 

• At the time that Square reported third-quarter results, Olivetree Global had suggested the Street “may ultimately decide” that the company was toward the end of level-setting consensus expectations.
• During the fourth quarter, there was great enthusiasm regarding the Cash App, Forman said. 
• Square’s stock spiked on a change-of-control provision.
• Although Square increased some disclosures last quarter, they're no longer providing adjusted revenue.

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Forman's Ideas For Square Investors  

Square’s business has been decelerating. Reinvestments in the business may drive a reacceleration, but Forman said that is still a few quarters away.

Street expectations are below the company’s 2020 guidance of revenue growth in the low 30% range, with flat EBITDA margins.

Forman said investments in sales and marketing have driven an upturn in key indicators, including awareness, web traffic and revenue contribution from new sellers.

Square has been suggesting that the impact of pricing changes will begin this quarter and “we will be watching for this outcome,” Forman said. 

Square Price Action

The stock was trading 1.86% higher at $78.48 at the time of publication Wednesday.

Photo courtesy of Square.