Square Stock Falls As Revenue, Payment Volume Miss Views Amid New Bitcoin Investment

Square stock fell Tuesday as December-quarter earnings topped estimates while net revenue and gross payment volume came in slightly below expectations, despite Bitcoin transactions via the Cash App boosting the top-line. In the Square earnings report, the company also disclosed a new $170 million investment in Bitcoin on top of its earlier $50 million purchase.


San Francisco-based Square‘s (SQ) earnings were 32 cents per adjusted share, up 39% from the year-earlier period. Gross profit increased 52% to $804 million, edging by estimates of $801 million.

Square said revenue jumped 141% to $3.16 billion as more Cash App users bought and sold digital cryptocurrency Bitcoin.

Analysts polled by Bloomberg had projected a 24-cent profit on net revenue of $3.17 billion. Excluding Bitcoin, Square said fourth-quarter revenue rose 23% to $1.4 billion. Square gets low margins from Bitcoin Cash App transactions.

Square Stock: Cash App Users Hit 36 Million

On the other hand, Square could reap a huge profit from its $50 million purchase of Bitcoin in October. The digital currency has soared since October and recently spiked on Tesla‘s (TSLA) $1.5 billion investment. Regulators, though, could crack down on the cryptocurrency.

Square stock fell 4.4% to near 245.20 in extended trading on the stock market today. In Tuesday’s regular session, Square stock fell 4.3%.

As expected, Square didn’t provide 2021 financial guidance. Square stock surged in 2020 as investors focused on the growth of its consumer Cash App. They shrugged off worries over Square stock exposure to small businesses and restaurants that might close because of the coronavirus pandemic.

Square disclosed that it ended 2020 with 36 million Cash App users, up from 30 million at the end of June.

Square Earnings: Gross Payment Volume Below Expectations

The company said subscription and services-based revenue climbed 60% to $449 million during the quarter.

Square said gross payment volume, or GPV, from merchant customers rose 92% to $32 billion. Analysts projected GPV of $32.1 billion amid Square’s exposure to restaurants and small businesses. GPV from merchants rose 6%.

Adjusted earnings before interest, taxes, depreciation and amortization, known as EBITDA, rose 57% to $185 million. Analysts expected adjusted EBITDA of 137.6 million.

Heading into the Square earnings report, the company had a Relative Strength Rating of 92 out of a possible 99, according to IBD Stock Checkup.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.


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