Square’s stock dropped in August after guidance for adjusted revenue fell short of analyst expectations of $599 million. Yesterday’s print show adjusted revenue of $602 million.
Investors should bear in mind that Square continues to grow revenue at an impressive rate in a total addressable market that Square estimates (in the US alone) at almost 30x current GPV/revenues. Additionally Square has yet to enter markets abroad. There are over 125 million businesses around the world that can potentially use Square’s services, so the company’s growth has the potential to accelerate once it targets international expansion.
The current valuation of $26 billion looks very reasonable at 6.5x sales.
This is not a recommendation to buy or sell. Stocks are risky and not suitable for everybody. Please do your own research.