Insider Activity Casts a Cloud Over Square, Inc. (SQ)

Despite closing -0.72 points lower on 07 February, Square, Inc. (NYSE:SQ) remains a key investment for many, but the stock is also a popular trading vehicle. Here’s how to trade it using charts and trading levels Friday. The shares dropped -0.99 percent at $71.95 with a light trade volume of 9.529 million shares. After opening the session at $71.77, the shares went as high as $72.98 and as low as $70.52, the range within which the stock’s price traded throughout the day. The firm is left with a market cap of $28.2 billion and now has 392.13 million shares outstanding. Square, Inc. (SQ) stock has gained 13.99 percent of market value in 21 trading days.

SQ stock has a trailing 3-year beta of 0, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$0.08 a share in the trailing twelve months. The stock’s value has surged 28.28 percent year to date (YTD) against a rise of 72.92 percent in 12 month’s time. The company’s shares still trade -28.87 percent away from its 1-year high of $101.15 and 95.73 percent up from 52-week low of $36.76. The average consensus rating on the company is 2.4, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Square, Inc. (SQ) will probably climb 9.55 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $115 price as 12-month high target. This represents a whopping 59.83 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $80, which represents a return potential of 11.19 percent when compared to the closing price of the stock of $71.95 on Thursday, February 07. The lowest price target for the stock is $30 — slightly more than -58.3 percent from SQ’s current share price.

History has shown that shares in Square, Inc. have gone up on 7 different earnings reaction days and are predicted to add 0.07 percent when the company reports upcoming earnings. Investors will get their next glimpse of SQ’s Q4 earnings on February 27. Analysts are forecasting revenue to climb 60.5 percent to $454M in the fiscal fourth quarter, while earnings are seen soaring by nearly 62.5 percent to $0.13 per share. It earned $0.13 per share, better than the $0.11, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $431M, better than the $414M analysts expected. Earnings are estimated to increase by 66.9 percent this year, 52.28 percent next year and continue to increase by 52.49 percent annually for the next 5 years.

Let’s take a look at some insider activity at Square, Inc. (NYSE:SQ) and see the pattern. The earliest insider trade took place on 02/01/2019. Reses Jacqueline D parted with a total of 15 thousand shares of company at average share price of $70.85. The total for the sales was set at $1.06 million. After this transaction, the Capital Lead account balance stood at 405.25 thousand shares. The stock grew 2.57 percent since that insider sale. On 01/30/2019, Dorsey Jack, President, CEO & Chairman, 10% Owner, sold 103.04 thousand shares at a price per share of $70.33. This removed 7.25 million shares from the insider’s fortune and the stock saw a 3.33 percent rally in value since the news became public. This transaction left 0 thousand shares in the President, CEO & Chairman, 10% Owner account.

On 01/23/2019, President, CEO & Chairman, 10% Owner Dorsey Jack performed a sale transaction worth $7.2 million. This sale at $69.87 each has eliminated 103.04 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded 4.01 percent increase since the transaction was reported. The insider now is left with 0 thousand shares remaining in the account. Dorsey Jack, who performs the President, CEO & Chairman, 10% Owner job, sold 103.04 thousand shares for $6.8 million. The disposal occurred on 01/16/2019 was priced at $66 per share. The share price soared 10.11 percent since the reporting date. Dorsey Jack now left with a stake of 0 thousand SQ stock worth $0 thousand after the insider selling.

The stock is currently hovering around the first support level of $70.65. Below this, the next support is placed in the zone of $69.36. Till the time, the SQ stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 56.56 on daily chart, which may remain a cause for concern. If the price breaks below $69.36 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $73.11 mark may result into a pull-back move towards $74.28 level.

Further, it is sporting a 9.46 on the Price-to-Sales ratio. Compare this with the industry average P/S of 8290.46. 39 percent is the gross profit margin for Square, Inc. and operating margin sits at -1.6 percent. Along with this, the net profit margin is -0.9 percent.