Square Inc. (NYSE: SQ) is scheduled to release its second-quarter financial results after the markets close on Wednesday. This will be one of its first few reports as a public company.
Please note — There was a discrepancy shortly before this piece was published. One source was calling for a loss of $0.03 per share (EPS) on $159 million in revenue, but these numbers are not representative of what they were shortly after 1:00 pm Eastern Time. The Thomson Reuters system is projecting a consensus estimate of -$0.11 EPS on revenue of $405.7 million. Estimates often change ahead of earnings, but that is a wide discrepancy.
This company entered the market in mid-November 2015 as one of the most anticipated initial public offerings (IPOs) of the year. CEO Jack Dorsey had made a name for himself by taking over the reins at Twitter Inc. (NYSE: TWTR) about a year ago while still leading Square. Many investors did not know what to expect from this IPO, much less the stock, but what is for sure is that both Twitter and Square are down in 2016.
Dorsey’s primary job has been to turn around the two floundering companies. Some investors believe he should hold only one of the jobs. He has done so poorly that perhaps he should hold neither.
Square creates tools to help businesses sell products and services and to help small businesses get financing. It announced horrible first-quarter earnings, which dropped its stock price 22% afterward.
In Square’s most recent quarter, revenue rose to $379 million from $251 million in the same period a year ago, but the company lost $96 million. The theory behind the drop in share price also includes slowing revenue and the question of whether its business model will ever allow it to be profitable.
A few analysts weighed in on Square over the course of the second quarter:
- BTIG Research has a Buy rating with a $12 price target.
- Wedbush has a Neutral rating with an $8 price target.
- Morgan Stanley reiterated an Equal Weight rating with a $10 price target.
- Evercore ISI has a Hold rating with a $7 price target.
- Piper Jaffray has a Neutral rating with a $10 price target.
So far in 2016, Square has underperformed the broad markets, with the stock down 23%.
Shares of Square were trading up 1.4% at $10.19 on Tuesday, with a consensus analyst price target of $12.25 and a 52-week trading range of $8.06 to $15.91.
Twitter traded up 3.9% at $17.06. The consensus price target is $16.82, and the 52-week range is $13.73 to $31.87.