Square Sinks On Poor Guidance, But Its Current Market Cycle May Be Rounding Out

Summary:

• Square Inc SQ sank 9% on Thursday after the company posted earnings that missed Wall Street expectations.
• However, as the stock is near the end of its current market cycle, we expect it to move higher in the coming months.

Square Stock Weekly Chart

The company reported earnings per share of $0.11 and total revenue of $489 million, above analyst estimates of $0.08 and $478 million. For next quarter, management expects earnings of $0.14-0.16, below the average estimate of $0.19.

CEO Jack Dorsey emphasized the positive, “What's been top of mind has been around ecosystem that we're building. This is our strongest differentiator. It not only benefits our customers, wholesalers and increasingly individuals with the Cash App, but also benefits our internal teams.”

In analyzing the market cycles for Square, we can see the stock has completed or is close to completing the corrective phase of its current cycle. Though there is still some downside risk in the near-term, we expect more favorable price action into the summer.

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