The big question is - who is Square competing with.
Now that Square is a public company with shareholders, the Silicon Valley mantra of growth-at-all-costs no longer generally applies, instead the focus is on profitability/ROI. Which is something that Square lacks, and is in an industry with slim margins already.
Anecdotally, tons of other people. Looking at the coffee shops and smaller stores in my area there's a pretty wide array of iPad-POS systems in use that aren't Square. In fact where I am (NYC) I'd wager that Square holds a plurality of that market rather than the majority.
Most of their frontends (in so far as I have to interact with them as a customer) aren't quite as slick as Square's, but they do get the job done, and presumably vendors use them because they're cheaper, which only underscores how fragile Square's business is.
These third party solutions aren't as sexy or slick as Square, but ultimately when it comes to payment processing sexiness is very, very far down the list of priorities.
It's also worth noting that there are big juggernauts moving in on Square's territory of physical transactions - PayPal being one - who already run enormous electronic payment volume. Stripe also has a big piece of the electronic payments pie and can potentially move in on Square's territory, while Square has so far been unable to branch out beyond physical payments.
I'm sure you can build a great business in that market, but is it a 3 billion dollar business?
There's a bunch internationally where Square hasn't really begun to compete.
It's been kind of a (minor) bloodbath so far in the markets today. So, a 10% drop for a young, growth-oriented company is not terribly surprising on a day like today, I'd think.
0: https://www.google.com/finance?cid=13756934
My wife and I have put in more than 20 unsuccessful offers attempting to stay in our unfortunately popular neighborhood in the last two years. We have been chasing the affordability train for some years now, our increasing bids never getting ahead of the frenzy... (today, it seems we're at peak market and it'd be foolhardy to buy perhaps...)
NB: we don't just 'move further out' not only because of 20 years of community, our love of bike commuting, and our great 'hood...
...we are bound by the location of our excellent public school. Non-parents may not realize the staggering import of lucking into a K8 public school you truly love... for two siblings in SF, staying in our school instead of paying for some private (assuming we could get into one) will amounts to well over half a million dollars in post-tax income over the next decade...
We too are part of the tired story of 'middle' class (by SF standards... :P) professional families with 2x full time incomes finding it almost impossible to hold on to a life of modest middle class comfort in SF (where middle class means: a 1000 sq ft 2 bedroom home for family of four; one 25K car; public schools; etc.)
All-cash comp in the 300-500k range is surprisingly common (at least for 10+ year experience people in hot fields); add any luck on equity, and 2 incomes, and you can afford SF rents as they stand.
Being able to reliably get a $300k/yr cash salary (salary+bonus, but still cash) seems more related to absurd rents than 10% of people getting huge equity payouts (which tend to not even be that huge). I also think a lot of people who get $1-5mm equity windfalls often think "oh, buy a house somewhere else" vs. "a small condo in SF".
(equity does affect the buy market; if there were a rate hike and China implosion at the same time, but people still had equity money, they'd probably be the majority of buyers.)
.. Or so I hope, since I just bought an overpriced Peninsula house last year :)
https://www.washingtonpost.com/news/business/wp/2016/01/20/n...
The environment should stabilize by 2016Q2.
I've spent the last year trying to understand the whole private-to-public process and I'm curious what this means for Square and other companies like Etsy who are experiencing the same drop in stock price.
Don't be wary ;)
Other remarkable tidbit: Shell now has a smaller marketcap than Unilever.
Here's one example: http://money.cnn.com/2015/10/15/technology/square-starbucks/
The Square IPO was less than employees who started after their last round and preferences made it even worse, meaning even though there is a liquidity event, employees who took options are out. With this significant drop, other employees who exercised their options (and paid taxes) are also out.
Not to say that a 10% drop isn't notable, but the whole market is taking a beating today.
Some of it is correction, but I think generally more people are starting to treat it as a hedge against general global markets--as a haven like gold.
It's not doing too poorly today, but it's not been immune to the larger macro trends of the last month.
Whole market is going nuts over the possibility of $10/barrel oil and overly strong US dollar
In other words, as you read this, unicorn valuations are getting less "unicorny," so to speak.
