Square (NYSE: SQ)
Mark Palmer, an analyst at BTIG and a steadfast bear of Square stock, is raising concerns about the interest of the company in the lending business.
Palmer raised fears on Monday, a few days after Square launched a new lending service dubbed “Square Installments” that will allow customers to acquire installment financing from merchants.
Customers deemed creditworthy by the algorithms of the company can borrow loans of between $250 and $10,000 under the new service. $SQ hopes the service will enable them to retain and attract new customers on its platform by providing friendlier payment options.
However, analysts are worried that “Square Installments” poses a considerable amount of risk that is likely to send shares of the California-based company down, owing to the higher-than-average default rates associated with such type of lending.
The other big reason why Square stock tumbled more than 10 percent on Monday could be as a result of the sale of more than 103,000 shares of Square by the company’s chief executive Jack Dorsey. The CEO exercised options after the close of trading on Friday in a move that seems to show how he feels about the future of his mobile payments company.
Shares in PayPal and other credit card companies also dropped after Palmer expressed fears that they will be more vulnerable to credit market volatility compared than traditional banks. Square shares ended the regular session with a loss of $8.08 to $86.06, while PayPal sank $2.63 to $80.55.
Square, Inc Company Profile
Square, Inc. provides payment and point-of-sale solutions in the United States and internationally. The company’s commerce ecosystem includes point-of-sale software and hardware that enables sellers to turn mobile and computing devices into payment and point-of-sale solutions.
It offers hardware products, including Magstripe reader, which enables swiped transactions of magnetic stripe cards; Contactless and chip reader that accepts Europay, MasterCard, and Visa (EMV) chip cards and Near Field Communication payments; Chip card reader, which accepts EMV chip cards and enables swiped transactions of magnetic stripe cards.
In addition, it offers Square Stand, which enables an iPad to be used as a payment terminal or full point of sale solution; and Square Register that combines its hardware, point-of-sale software, and payments technology, as well as managed payments solutions.
The company also provides Square Point of Sale software; Cash App, which provides access to the financial system, allowing customers to electronically send, store, and spend money; Caviar, a food ordering platform for restaurants to offer food ordering, pickup and delivery, to their customers.
Further, it offers Square Capital that facilitates loans to sellers based on real-time payment and point-of-sale data. Square, Inc. was founded in 2009 and is headquartered in San Francisco, California. – Bloomberg