Square Shares Dive after Company Fails to Meet Payment Volume Expectations
Square, the San Francisco based payments company, which is the best-known peer to peer cash transfer and payment hardware among others, suffered a reverse in the stock market after its gross payment volume failed to meet analysts’ expectations. However, in addition to that, the company’s forecast for the second quarter was also short of analysts’ expectations, and hence, it was not a surprise when the Square stock tanked by as much as 6%. That being said, it was not doom and gloom for the company as it was successful in beating the analysts’ estimates as far as revenue and earnings were concerned. The adjusted revenues of the company stood at $489 million as opposed to analysts’ estimates of $478 million. The earnings per share came in at 11 cents per share and beat analysts’ estimate which was pegged at 8 cents.
The past year has been particularly good for the company as peer to peer payment industry exploded and the company’s stock has largely been an excellent performer for its investors. Over the past year, the stock has experienced a jump of around 50%, and hence, the current fall in its share price will probably not be a particularly worrying trend for long term investors. The only thing that could worry investors is the fact that payments volumes did not meet analysts’ expectations of $22.8 billion. The payment volume for the quarter stood at $22.6 billion. The company has projected revenues in the range of $545 million and $555 million for the second quarter, and even that is short of analysts’ estimates for the quarter in question.
Despite the apparent pessimism exhibited by the market, the company’s net revenues actually great by 43% from where it stood in the same quarterback in 2018. Despite the drop in payments volume, it is necessary to point out that the company has grown its volume at a breakneck pace over the past year and has experienced a year on year growth of a staggering 150%. The cash app remains the company’s most important product, although the payment hardware has also quickly become one of the company’s key offerings in the recent past. The Chief Executive Officer of Square, Amrita Ahuja stated,
“Not only are we growing the base of monthly active users, but we’re growing the engagement per user — those have compounding effects in the results of our business.”