SQ - Embedded Expectations Analysis - 2019 01 16
Square, Inc. (SQ:USA) is currently trading at historical highs relative to UAFRS-based (Uniform) Earnings, with a 76.5x Uniform P/E. At these levels, the market has bullish expectations for the firm, and management is confident in the quality and variety of their product line, their ability to gain clients from free trials, and their search for a replacement CFOSpecifically, management is confident about their ability to find a replacement CFO. Management is also confident about the variety of offerings in their product line and the efficiencies gained by the users. Additionally, management is confident that users will adopt products after free trials, and can find innovative ways to use their products. However, management may be overstating the product's appeal to users not willing to accept credit card transactions on personal devices. Additionally, management may be overstating their hiring ecosystem and ability to generate innovations internally. Furthermore, management may have concerns that value-adding services may not offset price increases
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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