Square: Don't 'Be There'

| About: Square, Inc. (SQ)
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Cheddar and Seeking Alpha agree - avoid Square.

Now that Starbucks has terminated its agreement with Square, and with competitors like PayPal signing with Visa, the company is likely in for trouble.

Square's main clientele is small businesses, which is a risk, says a Cheddar analyst.

Seeking Alpha author Seven Seas Research and Cheddar TV say stay away from Square (NYSE:SQ). The point-of-service payment provider's stock was up around eight and a half percent today, but the sentiment is overblown, they say. In fact, Seven Seas says Square is a hold, even though its business model is a dog, but a Cheddar analyst simply says don't buy it. At issue is that the majority of Square's clientele - 88% - is small businesses with annual incomes under $500,000, and its biggest client, Starbucks (NASDAQ:SBUX), just pulled the plug. So Square is in a delicate position, particularly if we experience an economic downturn. Not to mention with competitors like PayPal (NASDAQ:PYPL) and Visa (NYSE:V) providing more compelling and inexpensive point-of-service pay offerings, Square simply doesn't have the chops to keep up.

Check out today's video for more details:

What do you think? Are you buying Square? Would you short it? If you already own it, are you selling or holding?

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.