Square: Negative Signals

Square falls after moving further into risky loans.

The departure of the CFO is another big risk for the stock.

The long-term margin picture is mostly misunderstood by investors leading to the insane valuation when the stock reached $100.

Square is still too expensive at $70 with these negative signals.

In a predictable move, an overpriced stock like Square (SQ) quickly surged to $100 and just as quickly gave up the gains of the last few weeks. The mobile-payments company has quickly expanded into new areas and the market rapidly accepted them as easy money. Some likely doubts are emerging over a further expansion into the loan business, questioning if Square is running out of opportunities for customer expansion in more strategic areas.

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