Square Inc. (NYSE: SQ) announced its first earnings report on Wednesday after market close. Stock price slumped 7.56% to $11.12 during Thursday morning trading.
According to the earnings announcement, total net revenue, which includes revenue from Starbucks, increased 49% to $374 million in this quarter. Net loss per share attributable to common stockholders, basic and diluted, was $0.34 for this quarter with 235 million weighted-average shares. This includes the impact of the deemed stock dividend of $32 million, or $0.14 per share, related to the issuance of additional shares to certain holders of Series E preferred stock at the time of the initial public offering.
Mr. Dorsey, Square’s co-founder and chief executive, said that the company will continue to invest in the business, especially as it bets that a consumer shift from using credit cards to paying with mobile phones, such as with Apple Inc. (NASDAQ: AAPL)’s Apple Pay app, will drive more businesses to start using Square’s terminals.
“We’re taking full advantage of the shift, and we’ll continue to make the right choices to ensure we continue to grow,” he said in an interview. “There’s a real opportunity to associate our logo with, ‘I can pay with my phone here.’”
For 2016, Square expects to earn total revenue range between $600 million and $620 million. Jefferies analyst Jason Keuferberg said that fundamentals continue to have ‘significant momentum’, keeping in view the company’s ‘very strong’ results for the fourth quarter. Most analysts have maintained a suggestion to buy at $15 target price.
The road has been bumpy for Square’s stock. After surging approximately 50% on its opening day, the company tumbled to below its $9 IPO price back in early February. However, since then, shares of the mobile payments service seem to be showing a trend reversal, having gained 40% during the past one month, while the S&P 500 has risen only by 7.37%. A major investor concern has been CEO Jack Dorsey’s ability to lead the company while also managing Twitter, which has been going through a difficult period. The upward trend in the stock indicates that investors are warming up to the notion of Jack Dorsey living up to his word that he can lead both companies at the same time, with Square’s earnings results adding weight to this claim.