Square stock is a rare spate of green amid a market meltdown prompted by the coronavirus outbreak after the payment services firm beat analysts’ expectations in its fourth-quarter earnings.
Square Inc (NYSE:SQ) reported revenues of US$1.31 billion for the quarter ended December 2019, surpassing the Zacks Consensus Estimate by 10.71% and well ahead of last year’s figure of US$932.53 million. The digital payment firm founded by Jack Dorsey, the man behind Twitter (NYSE:TWTR), produced EPS of $0.23, again beating the Zacks Consensus Estimate of $0.20 per share and up from $0.14 in the same period last year. Square stock is up 3.5% today.
Excitement is building around the firm, particularly due to the increasing use of various Cash App features like investing and card purchases. As a result, Cannacord’s Joseph Vafi has upgraded his position on Square stock from hold to buy, citing the potential for Cash App to become a “real consumer banking platform” and arguing that the total market for this consumer portion of the business could eventually be larger than the market for Square’s seller services.
Macquarie analyst Dan Dolev believes that Square could face less volatility stemming from the coronavirus than its competitors in the payment services field due to its more focused business model. The company generates nearly all of its revenue from the US and is “under-indexed” to tourism, meaning Square stock is less prone to volatility from travel restrictions and a severely beaten down Chinese economy.
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“In fact, management noted it did not see, nor does it expect, any material impact from the coronavirus. We expect a very positive stock reaction, especially given the global fears that have plagued the stock market thus far this week,” said Dolev.
Square’s earnings come just days after Mastercard (NYSE:MA) lowered its forecast for the upcoming quarter as a result of the coronavirus outbreak.
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