59.38 +0.13 (0.22%)
After hours: 7:57PM EDT
|Bid||59.30 x 900|
|Ask||59.45 x 1400|
|Day's Range||57.24 - 59.63|
|52 Week Range||49.82 - 101.15|
|Beta (3Y Monthly)||3.11|
|PE Ratio (TTM)||N/A|
|Earnings Date||Nov 5, 2019 - Nov 11, 2019|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||81.94|
Digital payments space heats up with growing proliferation of instant and same-day deposit services being offered by JPMorgan Chase, Square, PayPal and others.
Over the past decade, Square (NYSE:SQ) has become a dominant player in the mobile payments and financing sphere. And the SQ stock price since 2015 has reflected the company's exponential growth.Source: IgorGolovniov / Shutterstock.com However, Square stock is off its recent highs, as the shares got penalized following its second-quarter earnings report in August. Year-to-date, the SQ stock price is basically flat. Now may be a good time to ask why Square shares have been falling and what we can expect in the final quarter of 2019.I believe that the owners of Square stock may have to reset their growth and share price expectations. In the coming weeks, I'd be a buyer below $55, especially if the price approaches or even goes below $50. Here are the must-know fundamental metric and price levels for SQ stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Square Stock's Q3 Guidance Failed to ImpressSquare was co-founded in February 2009 by Jack Dorsey, who is also the CEO of Twitter (NYSE:TWTR). Its payments processing business, also referred to as "payments as a service," has been a game changer in serving small businesses. To the delight of early investors, this innovative financial services company has expanded quickly and become a disruptor.SQ stock reported Q2 earnings on Aug. 1 after market close. Notably, the payment-solutions company posted better-than-expected earnings and revenues. Its total net revenue increased 44% year-over-year to $1.17 billion. * 7 Tech Stocks You Should Avoid Now And on an adjusted basis, earnings were 21 cents per share, beating Wall Street's expectation of 17 cents per share. A year ago in Q3, Square stock's adjusted earnings per share came in at 13 cents.Square's subscription and services-based revenue also increased 87% to $251 million. Gross payment volume of $26.8 billion increased from $21.4 billion year-over-year. This growth has been driven by its Cash App, Square Capital and Instant Deposit. Analysts were especially impressed with Cash App -- quarterly revenue came at $135 million.The quarterly report once again confirmed that Square stock is a high-growth equity. Such shares in general are far more volatile than market indices or mature companies. Whenever investors feel growth expectations need to be toned down, they sell the stock first and ask questions later.Investors were especially concerned by the company's lower-than-expected Q3 guidance. Its Q3 adjusted-EPS guidance of 18 cents to 20 cents trailed the average estimate of 22 cents. Square management now expects Q3 adjusted revenue to be between $590 million and $600 million as opposed to the consensus of $599 million.Square stock's losses on the bottom line are also projected to be higher than expected. And many shareholders have likely felt that for the rest of the year, SQ stock may face a rising tide. Where SQ Stock's Price Is NowThe U.S. stock market has had several big winners in the past year. However, Square stock has not been one of them. Over the past 12 months, SQ shares are down about 36%.Let us briefly remember how the Square stock price has acted over the years to have a better view on what to expect in the coming weeks.Following SQ stock's IPO in late 2015, its price surged from $9 to an all-time high of $101.15 in October 2018, as the company became a darling of long-term investors.SQ stock went on a big tear during the summer of 2018, baking in plenty of euphoria. As a result, shares have been weak since reaching its all-time high on Oct. 1, 2018. By late December 2018, SQ was hovering around $50.After a highly volatile first half of 2019, August has not been a good month for Square shares either. That's of course due to the weak Q3 guidance which has underwhelmed investors.On earnings day, Square stock closed at $80.98. The next morning, SQ shares gapped down to open at $70.80. Now the shares are hovering around $58.From a technical perspective, I'm not expecting Square stock to make another significant leg up any time soon. In the next few weeks, shares are likely to be rangebound between $50 and $55.Plus, based on options trading, many bets are being placed that Square shares will see $50 before too long.The upside momentum can build up only when long-term investors feel that the SQ stock price justifies the future growth expectations. Consequently, investors need to be careful about chasing Square stock at this point. Square Stock Is Still Richly ValuedAlthough the decline in Square's stock has improved the valuation, the shares are still richly valued.While SQ currently enjoys a head start in serving small businesses, Wall Street has questions about whether it can maintain that growth. If the U.S. economy slows, Square's growth may start to decelerate rather quickly.Furthermore, Square is not yet profitable. Its net loss was $7 million in Q2, compared to a net loss of $6 million in the year-ago quarter. The company has reported net losses in five of the last six quarters. And unless it increases its revenue, Wall Street may take the high valuation of SQ stock down even further.The expansion of Square's ecosystem also means that SQ is facing increased competition. Square must now compete with many well-capitalized companies, including the global online-payments company PayPal (NASDAQ:PYPL), transaction-processing leader Visa (NYSE:V) and Fiserv (NASDAQ:FISV), which is shaping up to become a global-payments giant.Most SQ stock holders are well aware that the shares do not trade at bargain-bin valuation ratios, especially compared to its competitors. For example, SQ's forward price-to-earnings ratio is over 50. On the other hand forward P/E ratios for PYPL, V and FISV stocks are about 30, 28 and 26 respectively.Similarly Square stock's current price-to-sales ratio is over 6.3x. Companies generate revenue from the sale of goods and services. Analysts prefer a low P/S multiple, ideally below 1x. However, a P/S number between 1x and 2x is more common. To put the metric into perspective, S&P 500's average price-to-sales ratio is 2.1x.In short, I do not think there is much room for Square stock's valuation to head higher in the final quarter of the year. Sooner or later, SQ stock's valuation and revenue growth will be more in balance. Should You Buy SQ Stock?The fintech app revolution is quickly changing the way traditional banks, credit card issuers and mobile-payments companies work with businesses as well as with their retail customers. Therefore, over the long term, I would not bet against SQ stock. In the short term, though, stakeholders shouldn't expect smooth sailing.I believe the volatility and selling in the markets will continue in September as well as in early October. Like many momentum plays, SQ stock is likely to be a battleground between two camps: investors and traders.Square is a high beta stock at 3.3. The stock market has a beta of 1.0. SQ stock's beta measures its volatility in relation to the market. In other words, Square stock rises more than the market in bullish conditions and decreases more when markets are falling. Short-term traders should exercise caution if they want to participate in SQ stock's wide daily swings.It is likely that Square shares will fall toward $50, where I'd expect SQ stock to start to stabilize and then trade sideways until the next earnings release, expected in early November.Indeed, Square stock may become one of the first momentum stocks to test the lows it saw between $49-$50 in December 2018, hence making a double bottom in technical charts. Only then the twice-touched low may become a more reliable long-term support level.In other words, I'd not rush to buy Square stock yet. However, I'd get ready to initiate a position as the price declines further, toward $50.At the time of writing, Tezcan Gecgil did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Square Stock Has Been Under Pressure, May Retest $50 appeared first on InvestorPlace.
Square (NYSE:SQ) stock has fallen precipitously since my last analysis. Shares are down from roughly $80 per share in late July to $58.29 at the close Sept.13. With slowing growth, it's no surprise the stock has lost its mojo. But is the recent dip a sign that its time to buy?Source: Jonathan Weiss / Shutterstock.com In July I wrote about how Square stock could be a buy on a dip. However, with recent developments, I am less confident SQ stock can continue trading at such a high premium to its payment processing peers.How have things changed? Read on to see why it's best to avoid Square stock.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Sentiment Turns Bearish for SQ StockResults for the quarter ending June 30 were decent. Year-over-year adjusted revenues were up 46%. Adjusted earnings before interest, tax, debt and amortization skyrocketed from $62 million in the first quarter of 2019 to $105 million in Q2 2019. The company's Cash App business continues to scale, now generating $135 million in revenue for Q2.But investors are now writing off Square's growth potential. Adjusted revenue grew only 15% from the prior quarter. The company has built a tremendous brand with their flagship payment processing product. But in order to fuel growth, SQ needs new revenue streams to move the needle. * 7 Tech Stocks You Should Avoid Now Food ordering could have been the next frontier. The company owned DoorDash competitor Caviar. However, Square decided to throw in the towel, agreeing to sell Caviar to DoorDash for $410 million. The deal does have a silver lining, as it strengthens Square's ties to the food delivery powerhouse.Square is losing key customers. In late August, the financial press made big hay over the loss of Danish chain Joe & The Juice. This highlights Square's troubles with international growth. With U.S. sales slowing down, global growth is necessary to justify SQ stock's current valuation.Is this making a mountain out of a molehill? Joe & The Juice was likely not material to Square's revenues, but it does strengthen the bear case for Square. Square has a weak economic moat. Competitors with the capital to scale can easily steal market share.InvestorPlace's Mark Hake discussed this Sept. 12. Shopify (NYSE:SHOP) and PayPal (NASDAQ:PYPL) are inching into Square's business. Square is now playing defense. SQ is even trying to enter their respective businesses. The purchase of Weebly was obviously a play to build a Shopify-esque e-commerce platform. Cash App is Square's answer to PayPal's Venmo.With this in mind, let's see if the valuation of Square stock compensates for these risks. Despite Drop, Square Stock Remains OvervaluedSlowing growth has impacted the Square stock price. But shares continue to trade at a high valuation. Square's forward price-to-earnings ratio is 52.5. This is almost double PayPal's forward P/E of 30.3. SQ trades at a discount to PYPL in terms of its price-to-sales ratio, but enterprise value/EBITDA is another story. Square's EV/EBITDA is 718.3. This is leaps and bounds above PayPal's EV/EBITDA ratio of 40.3.But will Square stock grow into its valuation? If you take PayPal's EBITDA margin (18.3%) and apply it to Square's trailing 12-month sales ($3.95 billion), EBITDA would be $722.9 million. Apply a 40.3x multiple. This gives you an enterprise value of $29.1 billion, close to the mark of Square's current EV ($24.9 billion).There are a few caveats. With increased competition, there will be further pressure to compete on price. PayPal can easily subsidize a price war with Square. While Shopify is an equivalent size to SQ, Shopify can easily offer its e-commerce clients an in-house payment service. Growing into its valuation will not come easy.All of this makes it tough to justify the current price of SQ stock. It would be one thing if Square was the "name" in its niche. But in many ways, Square is unfortunately an "also-ran." Bottom Line: All Bets Are OffSquare stock has the potential to turn around the ship. Sales growth is slowing, but net revenue has not diminished. The company continues to make gains in the global payments marketplace. However, the recent negative sentiment is justified. In a "winner-take-all" world, even disruptors can get disrupted. Shopify is not an unsinkable ship, but it could do some damage to Square's market power. PayPal's scale brings up concerns over a potential price war.I missed the mark in my last Square analysis. I chose to stay on the sidelines, but believed SQ stock could inch higher. With growth names like Square, it's tough to predict future outcomes. For investors looking at the stock today, it's best to have the same conclusion.Square stock could be cheap down the road. But for now, the company needs leaps-and-bounds growth just to match its valuation. Things could be different when the company announces earnings again in November. But for now, steer clear of Square stock.As of this writing, Thomas Niel did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Recession-Resistant Services Stocks to Buy * 7 Hot Penny Stocks to Consider Now * 7 Tech Stocks You Should Avoid Now The post Stay on the Sidelines as Square Stock Continues to Fall appeared first on InvestorPlace.
According to a 2018 World Payments Report, global non-cash transactions totaled $482.6 billion as of 2016. These transactions are expected to grow at a compound annual growth rate of 12.7% from 2016 to 2021, with this figure expected to be even higher in emerging markets. The rapid shift towards cashless payments has not gone unnoticed by fintech companies looking to capitalize on opportunities within this expanding space. A fintech company is any company using technology or innovative techniques to perform traditional financial services. Bearing this in mind, we wanted to take a closer look at a few stocks in this space to see which appear most poised to outperform. We used TipRanks’ Stock Screener to narrow in on the most compelling investments by filtering our search based on sector, market cap and analyst consensus. Let’s take a closer look at the results. Square Inc. While investors have expressed concerns over Square’s (SQ\- Get Report) increasing number of competitors, some analysts argue its payments ecosystem, in which funds get cycled through and repeatedly generate transaction fees, will drive substantial long-term growth. Square’s business is comprised of its traditional payments segment as well as its subscription and services segment, which includes its Cash App that lets users send money directly to one another. Despite the fact that shares have declined 7% over the last month, SQ remains fundamentally strong based on its core payments growth. According to its August 1 Q2 earnings release, gross payment volume (GPV) jumped 25% year-over-year. While this figure represents a slight deceleration as SQ has gained market share and grown off a smaller base, the company stands to maintain its GPV growth levels based on further expansion of the eCommerce market (according to U.S. consensus data), increased digital payments and its competitive pricing for small and medium sized businesses (SMB). SQ’s subscription and services segment has also witnessed an 87% year-over-year gain thanks to its investments in expanding its two-sided payments ecosystem and new products. These products include its Instant Deposit, Cash Card, Capital, Payroll and omnichannel services from Weebly and Zesty. Adding to the good news, SQ announced during the earnings release that it was selling its food delivery business, Caviar, to DoorDash for $410 million. This sale should help boost the company’s cash flow. Needham analyst Mayank Tandon tells investors that as the ecosystem expands and the business scales, EBITDA margins can reach mid-30s long-term, consistent with the mature payments processors. He adds, “SQ trades at about 8x our EV/FY20 revenue estimate. While the multiple is higher than traditional payments companies, we believe it is reasonable when comparing it to the 9.5x median valuation of other open-ended payments/software growth stories.” As a result, the five-star analyst reiterated his Buy rating and $90 price target on September 12. He believes shares could surge a massive 54% in the next twelve months. Wall Street is divided when it comes to Square. With 10 Buy ratings, 8 Holds and 3 Sells assigned in the last three months, the fintech is a ‘Moderate Buy’. Its $79 average price target implies 35% upside potential, the highest out of the three stocks on our list. Paypal Holdings Inc.While PayPal (PYPL\- Get Report) shares have dipped 8% in the last three months, some analysts say to buy the pullback based on its strong long-term growth narrative. The pullback comes in part as a response to PYPL’s performance in its latest quarter. While the company was able to post an earnings beat on July 24, it missed the consensus estimate for revenue. Investors were also not pleased with its full year 2019 guidance. As a result of its sale of U.S. consumer credit receivables portfolio to Synchrony, revenue growth is expected to slow by 3.5 percentage points. That being said, it’s important to note that total payment volume (TPV) increased 26% year-over-year on an FX-neutral basis thanks to its digital money transfer app Venmo and person-to-person (P2P) volume.PayPal also managed to pull off a win with respect to new customers. It added 9 million new active accounts in the quarter, up 17% year-over-year. Part of this is due to its One Touch product, which is designed to make checkout faster and more convenient. The service eliminates the need to log into an account or fill out billing details, with customers able to make purchases with a single touch.Based on all of the above factors, Canaccord Genuity’s Joseph Vafi believes that the dip presents investors with an attractive entry point. “Short term, we believe the guide-down post Q2 has de-risked the story into next year. Delays in large deal integration may actually become tailwinds for growth next year. Net net, with the pullback in the stock post last quarter’s results, we see positive risk/reward in PYPL shares currently,” he explained. As a result, the 4.5-star analyst upgraded the rating from a Hold to a Buy and raised the price target from $110 to $118 on September 12. All in all, Wall Street takes a bullish stance on PYPL. It has a ‘Strong Buy’ analyst consensus and a $130 average price target, suggesting 22% upside potential. JPMorgan Chase & CompanyWhen most investors think of fintech stocks, J.P. Morgan (JPM\- Get Report) isn’t usually the first name that comes to mind as it’s often regarded as more of a traditional banking company. That being said, J.P. Morgan is making waves in the fintech space thanks to its new same-day deposits.On September 10, the company announced that it would be launching free same-day deposits for its WePay platform users that have bank accounts with the company. The service can already be utilized by certain customers and will be available on all of its platforms by the end of the year. Investors were thrilled by the news, with shares climbing 3% higher in the last three days. This is on top of the 23% it has already gained year-to-date. The excitement is due to the fact that its fintech competitors can take up to two business days to process payments and charge an extra fee for faster service.This service is part of a larger effort to make a name for itself as a fintech company. The company announced in October of last year that it was building a “fintech campus” to house over 1,000 employees in Palo Alto, California. JPM also released a digital brokerage service, You Invest, in August 2018 that includes free trades, a portfolio building tool and access to equity research.While some have expressed concerns regarding management’s September 10 announcement that it cut its full year 2019 guidance for net interest income, one top analyst believes JPM is making up for it with its focus on fintech.The company’s foray into the world of fintech lends itself to Wells Fargo analyst Mike Mayo’s conclusion that now is the time to buy JPM. As a result, the four-star analyst reiterated his Buy rating while lowering the price target from $130 to $125 on August 16. Despite the price target cut, he still believes share prices could rise 4% in the next twelve months. 6 Buy ratings and 3 Holds received in the last three months add up to a ‘Moderate Buy’ analyst consensus. Its $122 average price target indicates 2% upside potential. Discover the Street’s best-rated stocks with the Top Analysts’ Stocks tool
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(Bloomberg) -- Jack Dorsey’s Square Inc. already lets customers buy and sell Bitcoin on its popular Cash App. Soon, it may let them buy and sell stocks. Square is testing out a new Cash App feature that would enable users to make free stock trades, according to a video outlining the product’s features seen by Bloomberg. While the exact date of its launch is yet to be determined, employees began testing the new feature in recent weeks, according to a person familiar with the company who asked not to be identified discussing private matters.A spokesman for Square declined to comment.The free stock trading feature would position Square as a direct competitor to fintech startup Robinhood Markets Inc., which has gained millions of customers by offering no-fee trading, and most recently garnered a valuation of $7.6 billion. Robinhood has since expanded into other offerings such as options trading and margin trading, which would not be offered in Square’s initial product, the person said. Eventually, Square’s new service and others like it could pose a challenge to more established online brokers, like E*Trade Financial Corp.“We are seeing the cadence of free trading increase and I do think that’s something the broader industry can’t dismiss,” said Devin Ryan, an analyst with JMP Securities. “As a result, the pricing in those areas will continue to move lower.”Cash App and other peer to peer payment platforms are known for having a young customer base, similar to Robinhood. If Robinhood is any indication of the interest in free trading, Square could quickly gain a lot of traction. Prior to Robinhood's launch, it had a waitlist of 1 million people. Near the end of 2018, it said it had more than 6 million users, though it's unclear how many of them are active on the platform.Square’s Cash App started out by letting users send money to friends, and has since expanded into debit cards and Bitcoin trading. While Square doesn't consistently give updates on how many people are using Cash App, the company said it had more than 15 million monthly active users as of last December. Though there isn’t an immediate path to profitability for most free financial products, the race to add more users to platforms like Cash App has been fierce, with other businesses like PayPal Holdings Inc.’s Venmo also seeing big growth.Right now, fintech companies offering such products largely make money on the interchange fees when customers use their debit cards or on fees they charge for transferring funds to banks instantly. In its most recent letter to shareholders, Square said that revenue from Cash App was $135 million for the quarter, excluding Bitcoin. In a note published earlier this month, KeyBanc analyst Josh Beck said revenue from Cash App could reach $2 billion over the next three years. (Updates with analyst quote in fifth paragraph.)To contact the author of this story: Julie Verhage in New York at email@example.comTo contact the editor responsible for this story: Anne VanderMey at firstname.lastname@example.org, Mark MilianTom GilesFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S. stock futures are trading higher this morning and now sit a whisker from new records.Source: Shutterstock Ahead of the bell, futures on the Dow Jones Industrial Average are up 0.32%, and S&P 500 futures are higher by 0.22%. Nasdaq-100 futures have added 0.07%.In the options pits, calls continued their recent trend of trouncing put demand while overall volume came in near average levels. By the time the closing bell rang, 21.7 million calls and 16.5 million puts traded. Meanwhile, over at the CBOE, the single-session equity put/call volume ratio remained near its two-month low at 0.55. With the spate of low readings in September, the 10-day moving average continues to be pulled lower to close under 0.62.InvestorPlace - Stock Market News, Stock Advice & Trading TipsA diverse group of equities landed atop the most-active options leaderboard. Coca-Cola (NYSE:KO) was flooded with options volume ahead of today's dividend payout. Square (NYSE:SQ) fell to a nine-month low on above-average volume. Finally, Intel (NASDAQ:INTC) rallied for its seventh day in a row, but resistance overhead gave a reason for put buying. * 10 Big IPO Stocks From 2019 to Watch Let's take a closer look: Coca-Cola (KO)Consumer staples have enjoyed a consistent upward march this year, and nowhere has the trend been more obvious than in Coca-Cola. Plunging interest rates are creating renewed demand for dividend payers. KO stock's 2.92% stands tall compared to the 10-year yield, which is plumbing to the depths near 1.75%.And it is this juicy dividend that options traders have to thank for Thursday's explosive volume. The boom in call volume was driven by investors seeking short-term control of the stock for eligibility to the upcoming 40 cent quarterly payment. KO is trading ex-dividend this morning requiring you to have owned it by yesterday's close to participate in the next pay-day.As is usual with dividend targeting, calls drove the bus with activity zooming to 721%. In total, 206,418 contracts changed hands with 95% of the tally coming from calls.Implied volatility pushed to 20% landing it at the 29th percentile of its one-year range. Premiums are baking in daily moves of 69 cents or 1.3%. Square (SQ)The broad market is a whisker from record highs, but some sick stocks are sinking toward 52-week lows. You can count Square shares among the ill. SQ fell for the fifth straight day yesterday amid increasing distribution.And the charts leave little room for optimism moving forward. The next potential support zone isn't until $52.50, which is 9% lower. While buyers could swoop in to the save the stock before then, I certainly wouldn't bet on it with every major moving average now pointing lower.On the options trading front, puts outpaced calls by a slim margin. Total activity climbed to 250% of the average daily volume, with 159,984 contracts traded. Puts accounted for 52% of the sum.Despite the deterioration, we've seen virtually zero fear. Implied volatility just sank to 39% or the 6th percentile of its one-year range. Premiums are cheap, so if you're banking on the bears, long puts or put spreads are attractive. Intel (INTC)Intel is on the rise, notching its seventh straight daily gain yesterday. The nascent recovery has been strong enough to pull the 20-day and 50-day moving averages higher. This confirms buyers have officially wrested control of the short- and intermediate-term trends.INTC stock now stands at a critical juncture; $53.25 is a powerful resistance zone that has kept a lid on INTC ever since April's disastrous earnings drop. Tack on the fact that Intel shares are extremely overbought and this is as logical a level as any for the stock to pause. At any rate, it's not a low-risk entry, so I'd caution against piling in here. A pullback would provide a better spot to jump in. * 7 Stocks to Buy to Ride the Vegan Wave As far as options trading goes, puts proved more popular despite the day's rally. Activity swelled to 155% of the average daily volume, with 101,473 total contracts traded; 56% of the trading came from puts.Anxiety has been easing alongside the price rally. Implied volatility has fallen to 25% or the 23rd percentile of its one-year range. Premiums are pricing in daily moves of 83 cents or 1.6%.As of this writing, Tyler Craig didn't hold a position in any of the aforementioned securities. Check out his recently released Bear Market Survival Guide to learn how to defend your portfolio against market volatility. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Big IPO Stocks From 2019 to Watch * 7 Discount Retail Stocks to Buy for a Recession * 7 Stocks to Buy Benefiting From Millennial Money The post Friday's Vital Data: Coca-Cola, Square and Intel appeared first on InvestorPlace.
In this current environment, buying Twitter (NYSE:TWTR) above the psychological threshold of $40 seems risky. The last time Twitter stock was so consistently elevated was back in June of last year. During that period, TWTR was angling to break into $50 but it failed quite spectacularly.Source: Worawee Meepian / Shutterstock.com Another point to consider is what my InvestorPlace colleague Will Ashworth recently stated. Comparing Twitter to Square (NYSE:SQ), Ashworth declared that the latter was the better name. One of the reasons is that Square is fundamentally more useful and valuable than Twitter.As Ashworth points out, SQ has introduced many innovations, one of which is Square Terminal. He wrote last month:InvestorPlace - Stock Market News, Stock Advice & Trading TipsAt the Canadian launch of Square Terminal, Dorogusker, Square's head of hardware, told reporters that the portable terminal provides small- and medium-sized businesses with the ability to manage inventory, send invoices, record deposits, manage payment histories, and generate reports about their companies…The product eliminates the need for shopkeepers to deploy a slew of iPads, smartphones and tablets, to successfully operate their businesses.Plus, TWTR stock is just a social media-based investment. In that space, Facebook (NASDAQ:FB) is king, and by a very wide margin. * 10 Stocks to Sell in Market-Cursed September Having said that, Twitter stock has some surprising catalysts that could help support shares in a recession. Here are three reasons why: President Trump Loves TwitterThere's an old saying that there's no such thing as bad publicity and Twitter is testing that thesis. As we all know, President Trump loves using the social media platform. Perhaps it suits his personality. Perhaps because he's a former reality TV star, he's a master of the soundbite.Of course, it's difficult to quantify the impact the executive office has had on Twitter, and some experts have stated Trump imposes a negative influence on the company because of issues like bullying and harassment.Still, I'm going to argue that overall, this administration has provided a net positive impact on Twitter stock. Primarily, every time Trump makes a groundbreaking announcement or posts a controversial statement, it's almost always done through Twitter. When various media outlets report on the subject, the company gets free advertising.Further, Twitter caters to a younger audience, ultimately helping the company's revenue-generation efforts. Since late last year, social media has transitioned into the leading news source, besting newspapers. And Trump's tweets of consciousness inspire other politicians to respond. In many ways, Twitter is a real-time, dynamic news source. That very well might benefit Twitter stock. Political Rancor Is Good for Twitter StockRecently, Oppenheimer analysts upgraded media behemoth Comcast (NASDAQ:CMCSA). Although Comcast suffers under the broader framework of cord cutting, CMCSA has moved up significantly this year.Interestingly, one of the reasons analysts there are so optimistic is the upcoming 2020 elections. The last presidential election was a golden moment for cable TV, lifting the dying traditional news media sector. With an even more contentious political environment, cable providers like Comcast should benefit.I don't really see it that way. According to the Pew Research Center, a significant percentage (22%) of the under-50 crowd get their news from social media. Moreover, a whopping 36% of the under-30 folks get their news from sources like Twitter. Right there, you have a good reason to consider Twitter stock: the underlying company will eventually replace other sources (TV, radio, and print) for news distribution.If that doesn't convince you to think about TWTR stock, also note millennials' political engagement behaviors. Nobody in this group is writing to their Congressional representatives. Instead, they're on Twitter.This isn't just a nice little statistic. Advertisers know these trends firsthand and are willing to pay big bucks for this lucrative exposure. While we'll see many winners come November 2020, one of the biggest could be Twitter stock. Twitter Is More Open Than FacebookOne common criticism against TWTR stock is that Twitter appears a permanent number two to Facebook. As everyone knows, Facebook has well over two billion active users. On the other hand, Twitter has somewhere around 320 million active users. It's not even close.But that's not where the argument ends, at least for this comparison. In recent years, Facebook has incurred multiple scandals involving privacy violations. As a result, CEO Mark Zuckerberg has attempted to shift his organization into a more privacy-friendly platform.I don't think that's necessarily a bad move for Facebook. But compared to Twitter, this shift doesn't lend itself well to distributing political opinions. In contrast, Twitter has always encouraged openness and engagement within reason. Thus, in the 2020 elections, we should find more robust debate occurring on Twitter than on other social media networks.Coming full circle, I think that's beneficial to Twitter, and not just from the eyeball count. More young people have used social media in politically meaningful ways than any other generation. And it's young people whom advertisers most wish to target.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post The Presidential Election Is a Twitter Stock Tailwind appeared first on InvestorPlace.
If you're bullish on Square (NYSE:SQ) and its long-term prospects, there's good news and bad news off and on the SQ stock price chart worth heeding. Let me explain.Source: Shutterstock It's no secret the initial driver for Square stock falling out of favor with investors was the company's earnings report in early August, which harbored a modestly below expectations third-quarter revenue forecast and announced sale of its Caviar business. And for an often impulsively determined Wall Street, the lack of near-term clarity trumped the longer-term growth narrative.Appreciatively, for the buy-and-hold Square stock investor it's been a difficult environment to maintain the faith. After cratering by 23% in August, September's tally thus far has racked up an additional price drop in SQ stock of 5%. What's more, after coming on strong in the first quarter of 2019 with shares sprinting to a gain of nearly 50%, SQ is barely hanging on to a positive return this year.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThe frustration for Square shareholders has been likely compounded by the broader market which is up 20% after snapping back toward all-time highs after its own brief, but volatile corrective swoon in August. And now SQ stock's continued weakness is pointing to additional bad and good news for bullish investors in the days and months ahead. SQ Stock Daily Price ChartWith Wall Street still holding a grudge against Square stock, the latest price action has dismantled a higher low, double-bottom pattern loosely supported by the 62% Fibonacci retracement level. If you were bullish on the bottoming price pattern, and I'll include myself among that camp, it's time to recognize the technical failure and remain on the sidelines for the time being.Near term and backed by a weak-looking stochastics set-up, SQ stock's bearish price action suggests shares will be heading even lower in the near future. In fact, for investors unconvinced of Square's longer-term growth prospects, which isn't entirely without merit either, shorting shares makes sense.The next logical testing is last year's December low near $50. A challenge of those levels offers the promise of a minimum return on investment of nearly 15% for an investor shorting SQ stock today. While I'm not bearish and prefer simply monitoring shares for a future purchase, technically I would suggest a blended stop-loss above $63 which looks good for containing losses off and on the price chart. * 10 Battered Tech Stocks to Buy Now The good news for SQ stock bulls, if we're correct about additional downside pressure, the opportunity for much stronger value off and on the price chart is forthcoming. And with December's low already breaching Square's lifetime 50% retracement level -- a test of 62% support near $44 isn't out of the question.Disclosure: Investment accounts under Christopher Tyler's management do not own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler's observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional options-based strategies, related musings or to ask a question, you can find and follow Chris on Twitter @Options_CAT and StockTwits. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post A Large Problem, A Larger Opportunity for SQ Stock Investors appeared first on InvestorPlace.
Canacord Genuity analyst Josef Vafi is bullish on PayPal and neutral on Square but thinks both digital payments companies have solid fundamentals.
Canaccord Genuity analyst Joseph Vafi downgraded Square Inc (NYSE: SQ) from Buy to Hold and lowered his price target from $88 to $64. At the same time, he said the recent consolidation wave in payments has created unprecedented competition, and Square will need to demonstrate more consistent payment volume growth and more momentum in the Cash App to warrant a more premium market valuation.
For the last few days the stock markets have been healthy. Sentiment has taken a turn to positive and it's like nothing bad is ever going to happen again. Just yesterday the indices rallied through incredible levels especially in small cap stocks. So there's no doubt that there are stocks to buy here.Today we discuss three high-profile stocks to buy: Visa (NYSE:V), Amazon (NASDAQ:AMZN), and Microsoft (NASDAQ:MSFT). These are fallen angels stocks because they have recently corrected off of their highs just when they looked like their rallies would never end. * 10 Battered Tech Stocks to Buy Now The time frames differ among them, but the concept remains the same. They were headed to the moon, then they tripped. So now the opportunity is to pick the right level to buy these stocks. All three management teams are impeccable and they rarely falter on their own. So the bullish thesis for all three AMZN, MSFT and V assumes that markets in general are not going to crash any time soon.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Microsoft (MSFT)It's hard to call MSFT stock a fallen angel stock because it's still up 34% year-to-date and it's only 5% off of the highs. Nevertheless, it has had a tough time in the last trading week, and what makes it interesting is that it did this while the equity markets were rallying hard.Normally, this raises an alarm and causes me to look into weaknesses which would bring sustained selling. But that's not the case here. This is a proven company who is merely having a normal price action give-and-take inside a very healthy ascending trend.Fundamentally MSFT is not cheap since it sells at 29 trailing price-to-earnings ratio and 8 times sales. But this is a company that deserves the benefit of the doubt so it is possible that they deliver strong growth to justify the higher valuations.This is all to say that Microsoft stock is not cheap but it still is a good one to own for the long term. So these dips are normal and should not cause a panic out of the stock.Technically, the zone around $130 per share is pivotal for MSFT stock. This was resistance in April, then a break out in June, and then a successful test for support in early August when markets fell in fear of the 10% additional tariffs tweet. So clearly the bulls earned the right to use it that support.Knowing this, makes it possible for the buy-programs to prevail over the bears in the battle over MSFT for as long as the equity markets are healthy. If I own shares, I don't panic out of them on these dips. Moreover, if I want to own some for the future then this is as good a time as any to start a position there.Alternatively I can use options to sell puts or spreads below said support to generate income without needing rallies. For this, it is important to note that if stocks correct this year from geopolitical risk, then Microsoft stock is vulnerable to a 12% correction. Visa (V)V stock is in a similar situation to that of Microsoft. It's a proven winner that was seemingly rallying to the moon without interruption. But then in the last few days, it fell 6% while the general markets are up big.Here too, the drop is not a reflection on Visa itself but rather part of normal price action. For the longest time credit card stocks with a presence in the fintech space like Visa and MasterCard (NYSE:MA) have been darlings because the investment dollars allotted to bet on financials shied away from buying money-center banks like Bank of America (NYSE:BAC) and JPMorgan (NYSE:JPM). Instead they piled into fintech.However the recent rally in yields caused a frenzied wave of buying the traditional banks and money has to come from the same bucket. So there is a rotation out of winners like V stock into laggards. The opportunity here is that rotations are usually temporary. Meaning the dip in Visa stock should be a buying opportunity.Just like Microsoft, Visa is not cheap. It sells at 35 trailing P/E and 18 times its sales. But this alone is not cause for alarm because that's how it's always been. So unless the bears have developed sudden incredible fortitude, I bet that the selling will abate soon.Technically, Visa stock should have support around $172 per share. Moreover there is bigger support from pivotal zones at $165 per share. So if I owned shares I don't panic yet. If seeking a long entry with room to spare, I like to sell puts into support zones on bad days to generate income as long as I can gauge the risk. * 10 Healthcare Stocks to Buy Despite the Headlines Visa stock is 7% off its highs, so if I sell a put in V stock at $160 per share I would own it after a 15% correction. This is a risk I can tolerate and I bet would be a fruitful one. I should know that there is short-term risk looming. if Visa falls below $183.75, it could invite sellers to $168 per share. Amazon (AMZN)I cannot write about potential upside of fallen angels stocks without including the biggest momentum story of all time. AMZN stock is one that has been in the news for decades. It draws critics and fans in droves and is subject to many a heated debate.After the May correction, Amazon stock made a nice recovery but it gave almost all of it back. And it now sits 10% lower than the July highs. The size of the moves in Amazon stock should never surprise investors. This is the mother of all momentum stocks and when it moves, it does it fast and long. So it is best to wait for confirmation of breakouts in either direction before trading it.Short term, Amazon stock rallies if above $1,853 per share, and could even recover what they lost since July. There will be resistance points along the way so it won't be easy. Conversely, if it falls below recent support near $1,740 then they could extend the correction down to $1,600 per share.In essence, the battle is between completing an ABC technical move lower or establishing a base for a rebound rally to breakout from the necklines above. Meanwhile, the AMZN stock is ping-ponging inside a tight range and I should chase the break out of either sides. I personally favor the upside potential for as long as the markets in general are healthy.For those thinking of turning this into an investment, Amazon is a safe bet in the long run in spite of its high valuation. It sells at 75 trailing P/E but only 3.4 x sales. So as long as they are delivering growth, a high P/E is a prerequisite. You have to spend a lot in order to grow a lot.We still have the same geopolitical risks we had when we first started this correction. So we are one headline away from rekindled panics. This is all to say that traders shouldn't take giant positions all at once with great conviction because we have are still hostage to headlines. The best homework can be obliterated short-term by silly headlines. So I don't risk what I cannot afford to lose.Nicolas Chahine is the managing director of SellSpreads.com. As of this writing, he did not hold a position in any of the aforementioned securities. Join his live chat room for free here. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Battered Tech Stocks to Buy Now * 7 Strong-Buy Stocks Hedge Funds Are Buying Now * The 7 Best Penny Stocks to Buy The post 3 Fallen Angel Stocks to Buy Before They Fly Again appeared first on InvestorPlace.
It's important to know the difference between a broken stock and a broken company, Jim Cramer told viewers of his Mad Money program Wednesday evening. Payment processing is only gaining in popularity as every merchant goes digital, and SQ has the added benefit of Square Capital, where it uses what it knows about merchants to make loans that no other lender can make. Cramer said Wall Street appears to be fed up with the company's weak commentary and guidance after every earnings report, no matter how good that report may be.
With Square (SQ) stock down more than 25% since August 1st, is now the time to buy? That’s what some investors are asking right now. Though shares have plunged over the past month, and trading at 42% of its 52-week high, the numbers are still strong for the company. Second-quarter revenue grew 46% year-over-year, while profit surged 55%. The primary factor in Square’s decline isn’t so much its poor performance, but that analyst lofty expectations were not met in Square’s outlook guidance. Furthermore, the company’s recent sale of Caviar has contributed to some confusion among investors, even though management say it will help them focus on core products and growth.5-star Guggenheim analyst Jeff Cantwell clearly sees the light at the end of the current dark tunnel, as he reiterates a Buy rating and $80 price target on SQ stock. (To watch Cantwell's track record, click here)Cantwell held meetings with Square management, where he came away mostly positive but still "mixed.” He says the “Cash App opportunity seems significant,” but “seller business increasingly feels like it is in 'reboot' mode.” And while management believes the Caviar sale will help with core revenue focus, Cantwell believes the surprising sale “complicates matters as it precludes management from providing much-needed clarity on the outlook for '20E,” a main driver in other analysts’ pessimistic views. One of Cantwell’s most positive views is on the Cash App. The analyst says the app “stands out as a success” for Square and believes this can be a significant source of revenue and EPS over the long-term. But he also believes the product development “remains important given (valid) investor concerns related to the [long-term] sustainability of Cash App's Instant Deposit-related revenue stream.” On a more cautious note, Cantwell says “competition is impacting SQ's ability to grow GPV,” with Adyen recently signing longtime Square customer Joe & the Juice. As a result, the analyst sees Square “increasing spend to help counter rising competition from other high-quality payments companies.” Square’s shifting strategy appears to “be unsettling investors in the near-term,” but updated guidance and an Investor Day early next year “would give [Square the] opportunity to re-calibrate investor expectations for” the short-term.All in all, though some analysts are concerned about the short-term, Wall Street is generally bullish on Square stock. TipRanks analysis of 19 analyst ratings shows a consensus Moderate Buy, with nine analysts recommending Buy, six saying Hold and three suggesting Sell. The average price target of $78.88 represents a 34% upside from current levels. (See SQ's price targets and analyst ratings on TipRanks)
Square's lawsuit against San Francisco over taxes offers insight into why out-of-state economic recruiters eagerly court the company.
The last time I compared Twitter (NYSE:TWTR) to Square (NYSE:SQ) was 16 months ago in April 2018. At the time, I suggested that Square stock was a better buy than Twitter stock over the long haul because the payment processor solves more problems than the social media platform. Source: IgorGolovniov / Shutterstock.com Flash forward to today and TWTR stock is up 58% through Sept. 9 versus 34% for Square and 14% for the S&P 500.Jack Dorsey, CEO, and co-founder of Twitter and co-founder of Square has seen his personal wealth increase substantially over this period thanks to the performance of both stocks. InvestorPlace - Stock Market News, Stock Advice & Trading TipsNot only has Twitter outperformed over the past 16 months, but it's also up 54% year to date while Square's gained just 10% or about half the return of the total market. Does that make Twitter the better buy? I don't think so. Here's why. Valuations on Square Stock and Twitter StockAs I write this, Twitter stock is trading at 10.5 times sales, 62% higher than Square. However, TWTR's forward P/E of 40.2 is cheaper than 55 times Square's forward earnings, so answering which stock is cheaper is really a matter of personal preference. * 10 Stocks to Sell in Market-Cursed September Because Square is still losing money on a GAAP basis, I believe P/S one of the few metrics that allow for an apples-to-apples comparison. Now, when it comes to free cash flow, one of my favorite financial metrics for assessing a company's financial health, Square's is coming on like gangbusters. In the latest six months ended June 30, Square's free cash flow was $136 million, 183 higher than in the same period a year earlier. Meanwhile, Twitter's free cash flow was $475 million, 81% higher than the previous six months. It looks like a tie, doesn't it?To determine which company has a better free cash flow situation, let's look at both companies' free cash flow yields using their trailing 12-month free cash flows, divided by their current enterprise values. Square's free cash flow for the trailing 12 months is $321.7 million. That gives it an FCF yield of 1.3% based on an enterprise value of $25.6 billion. Twitter's free cash flow for the trailing 12 months is $1.1 billion. That gives it an FCF yield of 3.4% based on an enterprise value of $31.0 billion. From this perspective, Twitter appears to be the cheaper buy. What this doesn't take into consideration the rate at which Square is growing its revenue. In the past three years, Twitter has grown its revenue from $2.2 billion in 2015 to $3.04 billion in 2018, a compound annual growth rate of 11.4%. At the same, Square's grown its revenue from $1.27 billion in 2015 to $3.30 billion in 2018, a compound annual growth rate of 37.5%, more than three times Twitter's growth. Future Promise and Square StockAs Square continues to introduce innovative products such as Square Terminal outside the U.S., its international revenues will continue to blossom.I recently attended the Wolfville Farmers Market in Wolfville, Nova Scotia. About an hour's drive from Halifax, Wolfville is the heart of farm country in the province. Almost all of the stalls were using Square products to process payments. Here's what I said about Square Terminal in August:"At the Canadian launch of Square Terminal, Dorogusker, Square's head of hardware, told reporters that the portable terminal provides small- and medium-sized businesses with the ability to manage inventory, send invoices, record deposits, manage payment histories, and generate reports about their companies…The product eliminates the need for shopkeepers to deploy a slew of iPads, smartphones and tablets, to successfully operate their businesses."From where I sit, Square's innovation will continue to enable it to grow revenues by 30% or more on an annual basis, while Twitter's going to struggle to grow its ad revenues by double digits. For this reason, Square deserves a higher valuation than Twitter. However, let's assume Square has a P/S multiple identical to Twitter. That would give it a market cap of $42.5 billion, 62% higher than its current market cap. The Bottom Line on Square Stock and Twitter StockTwitter stock has bounced nicely in 2019. I'll give it that.However, as my InvestorPlace colleague, Luke Lango stated at the end of August, "Twitter stock looks risky above $40."I said Square was the better stock in April 2018 and it failed to keep up with Twitter. Over the next 16 months, I have no doubt, this time it will be different. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks to Sell in Market-Cursed September * 7 of the Worst IPO Stocks in 2019 * 7 Best Stocks That Crushed It This Earnings Season The post Twitter's Been Hot, but Square Stock Still Is the Better Buy appeared first on InvestorPlace.
Square Inc (NYSE: SQ ) has taken a pounding in recent weeks and is now down 32% overall in the past year. Despite some impressive growth potential, one analyst said Wednesday slowing revenue trends and ...