Banking & Finance

How Did Square Stock Stand Up to COVID-19 in Q1?

Square Inc. (NYSE: SQ) is scheduled to release its most recent quarterly results after the markets close on Wednesday. The first-quarter consensus estimates are calling for $0.13 in earnings per share (EPS) and $620.34 million in revenue. In the same period of last year, this merchant services and mobile payment company said it had $0.11 in EPS and $959.4 million in revenue.

The company issued a release in March about the impact of the coronavirus pandemic on its business. Prior to the impact of COVID-19 in the United States, Square achieved strong growth during the first two months of the quarter. In January and February, gross profit increased 47% year over year, or 51% excluding Caviar from the 2019 period, driven by momentum across both its Seller and Cash App ecosystems. In January and February, Seller ecosystem gross profit grew 32% year over year and Cash App ecosystem gross profit grew 118%.

Beginning in March, the effects of COVID-19 began to affect the company’s growth, in particular due to a slowdown in gross processing volume for its Seller ecosystem. This offset relative strength in the Cash App ecosystem, where the impact on gross profit growth was less pronounced.

As a result, Square is revising its growth expectations for the first quarter of 2020 and now expects to report total net revenue in the range of $1.30 billion to $1.34 billion and gross profit of $515 million to $525 million.

Excluding Wednesday’s move, Square stock had outperformed the S&P 500 and Dow Jones industrial average with a gain of about 7% year to date. In the past 52 weeks, the share price was down 5%.

A few analysts weighed in on Square ahead of the report:

  • KeyCorp has an Overweight rating and a $70 price target.
  • Compass Point has a Sell rating with a $50 price target.
  • Raymond James has an Underperform rating.
  • UBS has a Neutral rating and a $54 price target.
  • BTIG has a Hold rating.

Square stock traded up about 3% at $68.55, in a 52-week range of $32.33 to $87.25. The consensus price target is $62.74.