Guggenheim analyst Jeff Cantwell downgraded shares of Square Inc. to. neutral from buy on Friday, writing that he expects the small- and medium-sized businesses who use Square's platform to experience a tough stretch in the second half of 2020 and throughout 2021. "Note that Seller generates ~66% of Square's gross profit, which means the bulk of Square's business will be experiencing headwinds due to COVID-19," he wrote. Cantwell is worried about "relatively low" survival rates for small businesses amid the fallout from COVID-19 as governments place capacity restrictions and other limitations on restaurants and retailers. He also expects muted consumer spending due to higher unemployment rates and said that new-business creation could be "very low" given heavy uncertainty about the virus and the economic climate. "We think Square's valuation now looks full, as we believe Square's many positives - most notably, Cash App - are now largely baked into the current share price," he wrote. The stock is down 0.5% in premarket trading Friday. It's lost 5.4% over the past three months as the S&P 500 has declined 13%. Read More...
Guggenheim analyst Jeff Cantwell downgraded shares of Square Inc. to. neutral from buy on Friday, writing that he expects the small- and medium-sized businesses who use Square’s platform to experience a tough stretch in the second half of 2020 and throughout 2021. “Note that Seller generates ~66% of Square’s gross profit, which means the bulk of Square’s business will be experiencing headwinds due to COVID-19,” he wrote. Cantwell is worried about “relatively low” survival rates for small businesses amid the fallout from COVID-19 as governments place capacity restrictions and other limitations on restaurants and retailers. He also expects muted consumer spending due to higher unemployment rates and said that new-business creation could be “very low” given heavy uncertainty about the virus and the economic climate. “We think Square’s valuation now looks full, as we believe Square’s many positives – most notably, Cash App – are now largely baked into the current share price,” he wrote. The stock is down 0.5% in premarket trading Friday. It’s lost 5.4% over the past three months as the S&P 500 has declined 13%.
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