SQ - Embedded Expectations Analysis - 2018 10 2
Square, Inc. (SQ:USA) is currently trading at historical highs relative to UAFRS-based (Uniform) Earnings, with a 100.1x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may have concerns about their growth opportunity in restaurants, and their ability to expand their customer base and adapt as their business growsSpecifically, management may be exaggerating their growth potential in the restaurant business, and may lack confidence in the performance of their point-of-sale products in unpredictable network environments. Additionally, they may lack confidence in the adaptability of their business as they increase their offerings, and may be exaggerating their degree of optionality moving forward. Moreover, they may lack confidence in their ability to expand their customer base, and may be exaggerating the consistency of their growth drivers. Finally, they may be exaggerating the extent to which restaurants encourage their customers to use the Caviar platform and download the app
Square is a commerce ecosystem that combines software with hardware to enable sellers to turn mobile devices and computing devices into payment and point-of-sale solutions. With the company's offering, a seller can accept payments via magnetic stripe, Europay, MasterCard, and Visa, or Near Field Communication; or online via Square Invoices, Square Virtual Terminal, or the seller's website or app. Also, sellers can gain access to reporting and analytics, next-day settlements, digital receipts, payment dispute and chargeback management, security, and Payment Card Industry compliance. The company's Cash App enable individuals to send and receive money electronically to and from individuals and businesses.
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