SQ – Market expectations are for Uniform ROA expansion, but management has concerns about their sales strategy, growth, and products

June 19, 2019

  • Square, Inc. (SQ:USA) is currently trading at historical highs relative to UAFRS-based (Uniform) Earnings, with a 72.3x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management has concerns about their mobile app sales strategy, revenue growth, and the utility of their mobile app and POS hardware
  • Specifically, management may be concerned about the use of third-party tools with their systems, their partnership with Eventbrite, and the fluidity of their mobile app sales strategy. Also, they may lack confidence in their ability to identify the needs of customers, sustain revenue growth, enrich their ecosystem through consolidations, and market the Square Card and payment platforms. Finally, they may be exaggerating the utility of their mobile app and POS hardware, the benefits of the Cash App, and the potential growth opportunities from international sporting events.

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