SQ - Embedded Expectations Analysis - 2020 0714
Square, Inc. (SQ:USA) is currently trading at a historical high relative to UAFRS-based (Uniform) earnings, with a 194.9x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about their Cash App, demand, over-all Seller ecosystem, and customer retentionSpecifically, management may lack confidence in their ability to sustain GAAP international revenue, provide new tools for their customers, and improve their Seller ecosystem. Furthermore, they may have concerns about the sustainability of Cash App demand through hairdressers and beauticians' video appointments, artists' online performance, and artists sending money. Also, they may be overstating the opportunity to bring new sellers in their ecosystem. Finally, they may be concerned about their ability to maintain average business loan sizes related to the stimulus program, and their loss reserve being four times higher than the prior quarterly run rate
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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