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Shares of mobile-payments firm Square ( SQ ) were tumbling early Friday as the company was downgraded following a mixed Q1 earnings report issued late the previous day. Square lost 29 cents a share in the quarter, or 14 cents excluding a one-time legal cost. Either way, it was worse than the 9-cent loss analysts had expected, according to Thomson Reuters. Revenue beat expectations, though, rising 51% to $379 million. Square lifted its adjusted-revenue guidance for the year (which excludes the soon-to-be-defunct partnership with Starbucks ( SBUX )) by $15 million, now $615 million to $635 million. It also raised its EBITDA (earnings before interest, taxes, depreciation and amortization) guidance by $2 million, now $8 million to $14 million. However, the May 16 expiration of Square’s post-IPO lockup period was looming on analysts’ minds. Wedbush’s Gil Luria downgraded the stock to underperform from neutral, with a 9 price target, predicting that insider shareholders will use this opening as a chance to get out. “We believe that Square is rapidly growing a business that may never reach peer (or guided) profitability, which will become apparent as growth slows over the next couple of years on competition and saturation,” Luria wrote. Square stock was down more than 17% in early trading on the stock market today , below 11 and sitting at a two-month low. The stock went public at 9 last November and peaked at 15.91 on March 31. BTIG analyst Mark Palmer was more confident about Square’s future but was still concerned about the lockup expiration. “Square arguably needed to post a strong Q1 2016 report to convince the soon-to-be unlocked investors to hold on to their shares,” Palmer wrote in a research note affirming his neutral rating. “While the company posted a headline earnings miss, much more important at this stage in its life cycle was a better-than-expected revenue print and increased fiscal 2016 guidance for both revenue and adjusted EBITDA.” Scalper1 News
Scalper1 News