Square shares tank
06 May 2016 | 7931 views | 0
Shares in Jack Dorsey's Square plummeted 20% on Friday amid concerns about rising first quarter net losses and the financing of its merchant lending programme.
The payments firm saw its total Q1 net revenue soar 51% to $379 million, but with operating costs ballooning 72% to $207 million, net losses were $96.8 million, up from $48 million a year before.
Adjusted quarterly losses come in at 14 cents a share, compared to the nine cents a share expected by analysts.
The part of the business most concerning the markets is Square Capital. The firm extended $153 million in loans and advances, up just four per cent on the previous quarter because of a delay in signing up a pair of new investors as a result of the "challenging credit market conditions".
With the investors now onboard and Square moving away from advances and towards loans, the company claims it is boosting its ability to attract new investors.
Nevertheless, by midday EST on Friday Square shares were down 19.6%, or $2.56, at $10.49.
The company did have some positive news, raising its full year adjusted revenue projection by $15 million to $615 million to $635 million.
Cashing in on America's move to EMV, Square has already received nearly half a million orders for its new contactless and chip reader and says that the runway remains long. Devices are sold at a loss but win new payment processing customers.