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Square Reports Q1 Earnings: What Do Analysts Think?

Square Inc (NASDAQ: SQ) shares traded higher by 6% on Friday morning after the company reported a Bitcoin (CRYPTO: BTC)-fueled surge in first-quarter revenue.

05/07/2021 12:14

Square Inc (NASDAQ:SQ) shares traded higher by 6% on Friday morning after the company reported a Bitcoin (CRYPTO: BTC)-fueled surge in first-quarter revenue.

For the first quarter, Square reported 41 cents in EPS on revenue of $5.06 billion. Both numbers beat consensus analyst estimates of 16 cents and $3.36 billion, respectively. Revenue was up 266% from a year ago.

Related Link: Uber Analysts Bullish After Q1 Report: 'Mobility's Recovery Continues To Progress'

Gross profit from the company’s Cash App was up $171 to $495 million.

Square also reported $3.5 billion in Bitcoin revenue and $75 million in Bitcoin gross profit in the quarter. Square said it lost $20 million on the $170 million worth of Bitcoin it purchased in February, as of March 31. Square said it now holds roughly $472 million in Bitcoin.

Multiple Growth Drivers: BTIG analyst Mark Palmer said Square’s report demonstrates that its two growth drivers, Cash App and Bitcoin, are both accelerating.

“While SQ’s stock price has retreated amidst a market buffeted by various macroeconomic crosswinds, the 1Q21 report that the company released today after the market close demonstrated that Cash App and Bitcoin remain very much intact as drivers of the company’s growth,” Palmer wrote.

KeyBanc analyst Josh Beck said Square has regained its Seller momentum, and Cash App demonstrated record engagement in the quarter.

“Cash App engagement was impressive with 18x transactions per month (40% improvement) and 7M WAU Cash Card users,” Beck wrote.

Bank of America analyst Jason Kupferberg said Square’s first-quarter numbers were impressive, but not particularly surprising.

“While the stock has pulled back recently, we note shares still trade at near all-time high multiples, and we question whether the current valuation can be sustained given the risk of Cash App deceleration,” Kupferberg wrote.

Monetization At Scale: Rosenblatt Securities analyst Sean Horgan said Square is demonstrating monetization at scale.

“Cash App's playbook is bearing fruit with a ~2.5x increase in Cash Card spend, 7mn weekly transacting users, and ballooning customer inflows exiting 1Q,” Horgan wrote.

Needham analyst Mayank Tandon said Square remains “the premier SMB payments ecosystem.”

“Over the LT, we remain positive on the shares and recommend it for large-cap growth investors looking for exposure to digital business and consumer payments,” Tandon wrote.

Ratings And Price Targets:

  • Bank of America has an Underperform rating and a $160 target.
  • BTIG has a Buy rating and a $295 target.
  • Rosenblatt has a Buy rating and a $330 target.
  • Needham has an Overweight rating and a $300 target.
  • KeyBanc has an Overweight rating and a $300 target.

(Photo: Square)