June 2, 2023

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SQ Stock Rises as Top Earnings Estimate Amid Post-Push Acquisition

SQ Stock Rises as Top Earnings Estimate Amid Post-Push Acquisition

Parental square shares roadblock (mint) jumped Friday after the company reported December quarter earnings, net revenue and total payment volume that beat analyst estimates. SQ stock rose despite slowing growth for consumer cash app services and limited guidance for the Afterpay acquisition.


Square’s stock jumped 16.1% to 110.31 in morning trading on stock market today. San Francisco-based Block reported fourth-quarter earnings late Thursday.

The company said the Cash app had 44 million monthly active users at the end of December, up from 40 million in June. Cash app growth slowed less than expected in the fourth quarter.

“Despite the inward panic, Cash App’s total revenue of $518 million, up 37% year over year, was 2% ahead of Street,” Jefferies analyst Trevor Williams said in a note to clients.

SQ Stock: Cash Outlook App

At Susquehanna Financial, analyst James Friedman said in his note to clients: “Looking at the first quarter of 2022, the cash numbers look better than expected.”

He added, “Concerns that Cash app users won’t withstand stimulus checks appear to have been amplified as user and engagement metrics appear robust. Gross profit per activity per month grew 13% year-over-year to $47 in Q4.”

Square earnings came in at 27 cents per adjusted share, down 15% from 32 cents in the same period last year. Analysts had expected earnings of 23 cents per share.

The company said gross profit increased 47% to $1.18 billion, versus an estimate of $1.16 billion.

Square said net revenue jumped 62% to $4.42 billion, boosted by app cash transactions for cryptocurrency Bitcoin. Analysts expected revenue to reach $4.04 billion.

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Square inventory: total payment volume meets views

Adjusted revenue rose 54% to $1.4 billion, topping estimates of $1.34 billion. Total payments from merchant customers increased 92% to $46.3 billion, in line with estimates. However, overall payment volume growth is expected to slow in the March quarter.

Square said earnings before interest, taxes, depreciation and amortization, otherwise known as EBITDA, came in at $184 million versus estimates of $143 million.

Square on January 31 closed its acquisition of Australia-based consumer lending startup Afterpay. The deal was announced on August 1, and was originally valued at $29 billion. However, a significant drop in SQ’s stock brought that value down to less than $15 billion at close.

Afterpay competes in the emerging “buy now, pay later” market that is encroaching on credit card networks.

Find Postpaid Instructions

“Management has given some details about Afterpay, but left a lot of details pending for Investor Day in May,” RBC Capital analyst Daniel Perlman said in a note. “Management has noted the importance of Afterpay to its omnichannel strategy, enabling Square to serve customers with large global merchants.”

At Keybanc Capital Markets, SQ Equity Analyst Josh Beck commented: “Afterpay synergies have been a focus of earnings appeal, with early deliveries including first day online merchant/BNPL integration and 100,000 cash application leading Afterpay merchants with a compelling vision to unite consumer/sellers. across channels and countries.”

Heading into Square’s earnings report, the stock has a relative strength rating of just 5 out of the top 99 possible, according to IBD stock check.

SQ stock is down 58% over the past three months.

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