Square, Inc.’s (SQ) stock has seen relatively steady growth over the past few months, after a short-term dip in price in March 2020. The payment solutions company continues upward movement on the WhaleWisdom Heatmap, despite being negatively impacted by the current coronavirus pandemic.
Square not only provides mobile payment solutions but also offers data analytics and other financial and marketing services to customers as the company appeals to many small businesses, it’s not surprising that the stock saw a dip in price in March 2020. However, despite the business challenges that the company and its customers have faced during the pandemic, the equity continues to march higher. Square has outperformed the S&P 500 in 2020, increasing by approximately 107.6% in comparison to the S&P 500’s gain of about 0.5% through late July.
Both hedge funds and institutions were actively buying the stock in the first quarter, and as a result, it has climbed on the WhaleWisdom Heatmap to a ranking of forty-four. Looking at the first quarter activity by the top hedge funds, the aggregate 13F shares held jumped to about 109.5 million from 97.7 million, an increase of approximately 12.1%. Of the hedge funds, 43 created new positions, 59 added to existing holdings, as 45 exited the stock while 45 reduced their stake. Echoing the sentiments of hedge funds, institutions were also active. Overall, institutions increased their aggregate holdings by about 7.7% to approximately 274.7 million from 255.1 million.
Despite investor optimism, as Square prepares to report results on August 5th, analysts are looking for the company to have lost $0.05 per share on revenue of $1.13 billion. However, despite the expected loss, analysts predict that the company will earn $0.26 per share this year and rise nearly four-fold by 2021 to $0.97 per share.
Analysts Have Skepticism Amid Strong Stock Performance
Cowen Inc.’s analyst, George Mihalos, downgraded Square to Market Perform from Outperform. Also, Bank of America’s analyst, Jason Kupferberg, spoke out about Square’s recent 56% rally, viewing it as hard to justify. Kupferberg called out the rally in part, due to the risk that many of Square’s small business customers could fold due to the pandemic.
Square’s recent growth and more long-term estimates are certainly encouraging for already optimistic investors. However, the fate of many small businesses negatively impacted by the pandemic still heavily influence Square’s future. Time will tell as to whether the company’s forward momentum can continue.