Why Square's Stock Is So Expensive

Motley Fool2021-05-28

More than a year out now from the start of the pandemic, Square's (NYSE:SQ) investors have prospered, benefitting from the accelerated digitization of retail, the renewed popularity of Bitcoin, and a ...

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Comments

Leira
2021-05-30
Leira
Whyyyy
- Leira:
  Por quoi
- zhuoyongquan:
  SiGh
- yooniique:
  ??
- zhuoyongquan:
  Whyyyyyyyy
JiaminFeng
2021-05-30
JiaminFeng
Have the potential to grow.
pekss
2021-05-29
pekss
It’s fortune is tied with that of bitcoin
- ngph:
  Agree
- pekss:
  Good
Alicia1605
2021-05-28
Alicia1605
Like and comment
Alvisgzw
2021-05-28
Alvisgzw
Hmmmm
JYIN
2021-05-28
JYIN
Like and comment pls

Leave a comment

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While the stock price increases have made Square an expensive stock, a growing competitive advantage the company is building on could help justify its expense.\nJust how overpriced is Square?\nBy most measures, Square has become an expensive stock. It was boasting a P/E ratio of just over 305 at the time of this writing. The S&P 500's current P/E multiple of 45 pales in comparison, even though that index has reached multi-year highs. Square also trades far above archrival PayPal's (NASDAQ:PYPL) P/E ratio of 60.\nHowever, one reason Square has become expensive is its performance. Square's stock price has risen by 170% over the last year, compared with just over 70% gains for PayPal. Square's return increases to 430% when compared with the March 2020 low.\nSQ data by YCharts\nStill, recent financials appear to not justify such an earnings multiple. An accounting rule requiring the company to count the value of Bitcoin transactions as revenue skewed revenue figures. 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The 2019 revenue figure comes in near the revenue increase in Q1 2021, indicating pre-pandemic growth rates have returned. Additionally, such increases have led to a forward P/E of 145, a reduction that could ease the sting of Square's current valuation.\nWhy investors should consider it despite the expense\nDespite recovering financials, Square may justify its expensive stock through a key competitive advantage: a more comprehensive finance ecosystem. Yes, PayPal reaches over 200 countries compared to Square's current five countries. PayPal also can manage most personal finance functions between PayPal and Venmo, which competes directly with Cash App.\nHowever, Square announced that it will soon open up to sellers in Ireland. 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As it adds customers and expands to more countries, today's stock price may not appear expensive for 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the potential to grow.","listText":"Have the potential to grow.","text":"Have the potential to grow.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/137237826","repostId":2138710402,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":134766919,"gmtCreate":1622260577231,"gmtModify":1704182436217,"author":{"id":"3581636635898281","authorId":"3581636635898281","name":"pekss","avatar":"https://static.tigerbbs.com/7dfef98c44b3810cffef7f3eb78524ba","vip":1,"crmLevel":5,"crmLevelSwitch":1,"authorIdStr":"3581636635898281","idStr":"3581636635898281"},"htmlText":"It’s fortune is tied with that of bitcoin&nbsp;","listText":"It’s fortune is tied with that of bitcoin&nbsp;","text":"It’s fortune is tied with that of 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and comment","listText":"Like and comment","text":"Like and 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