Advertisement
U.S. markets closed
  • S&P 500

    5,088.80
    +1.77 (+0.03%)
     
  • Dow 30

    39,131.53
    +62.43 (+0.16%)
     
  • Nasdaq

    15,996.82
    -44.78 (-0.28%)
     
  • Russell 2000

    2,016.69
    +2.85 (+0.14%)
     
  • Crude Oil

    76.49
    -2.12 (-2.70%)
     
  • Gold

    2,049.40
    +18.70 (+0.92%)
     
  • Silver

    22.98
    +0.20 (+0.87%)
     
  • EUR/USD

    1.0820
    -0.0007 (-0.06%)
     
  • 10-Yr Bond

    4.2600
    -0.0670 (-1.55%)
     
  • GBP/USD

    1.2672
    +0.0014 (+0.11%)
     
  • USD/JPY

    150.4270
    -0.0730 (-0.05%)
     
  • Bitcoin USD

    51,509.76
    -42.75 (-0.08%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,706.28
    +21.79 (+0.28%)
     
  • Nikkei 225

    39,098.68
    +836.48 (+2.19%)
     

Squarespace, Inc. (NYSE:SQSP) Could Be Less Than A Year Away From Profitability

Squarespace, Inc. (NYSE:SQSP) is possibly approaching a major achievement in its business, so we would like to shine some light on the company. Squarespace, Inc. operates platform for businesses and independent creators to build online presence, grow their brands, and manage their businesses across the internet. With the latest financial year loss of US$252m and a trailing-twelve-month loss of US$246m, the US$3.8b market-cap company alleviated its loss by moving closer towards its target of breakeven. The most pressing concern for investors is Squarespace's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Squarespace

According to the 17 industry analysts covering Squarespace, the consensus is that breakeven is near. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$6.8m in 2023. The company is therefore projected to breakeven around a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 77%, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

earnings-per-share-growth
earnings-per-share-growth

Given this is a high-level overview, we won’t go into details of Squarespace's upcoming projects, though, keep in mind that by and large a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Squarespace currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of Squarespace which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Squarespace, take a look at Squarespace's company page on Simply Wall St. We've also put together a list of pertinent factors you should look at:

  1. Valuation: What is Squarespace worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Squarespace is currently mispriced by the market.

  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Squarespace’s board and the CEO’s background.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Advertisement