SquareSpace stock price has been in a strong bearish trend as investors wait for the company’s second-quarter earnings scheduled for this week. The stock has crashed by more than 64% in the past 12 months, bringing its total market capitalization to about $2.8 billion.
Growth slowing
SquareSpace is a technology company that provides a platform that helps people build their personal and business websites. If you listen to podcasts or watch YouTube videos, you have likely heard its advertisements. It has millions of users from around the world.
SquareSpace operates in a significantly competitive industry. The biggest competitor in the sector is WordPress, the giant company that powers most websites. It also competes with Wix, a company valued at over $3.6 billion. Other competitors in the industry are Webflow, Weebly, and even Shopify.
SquareSpace, like other technology companies like Boxed, Affirm, and Zip, had a strong performance during the pandemic as the number of people using its platform rose. Entrepreneurs turned to its website to build applications while many people working at home used it to actualize their ambitions. The company has over 4.2 million users.
SQSP earnings ahead
As a result, the company’s total revenue jumped from over $484 million in 2019 to over $621 million in 2020 and $784 million in 2021. It’s losses also continued soaring as the company spent more on marketing. In the most recent quarter, the company decided to repurchase shares worth over $200 million. It also increased its full-year revenue guidance to between $867 million and $879 million. In a statement, the company’s CFO said:
“We have a long operating history of profitable growth, a consistently strong gross margin, and with a large and growing customer base. We believe the introduction of new products, combined with the optimization of existing offerings will accelerate our growth in the back half of this year as we look into the future.”
SquareSpace stock price has dropped sharply this year as investors worry about the company’s growth as the number of cancellations increases. At the same time, the rising interest rates have made growth and unprofitable companies unattractive.
The next key catalyst for the SQSP share price will be the company’s earnings scheduled for Monday. Analysts expect the results to show that the company’s revenue rose from $207 million in Q1 to over $212 million in Q2. They also believe that it will turn a profit to 21 cents per share. SquareSpace has a good track record of beating analysts’ forecasts.
SquareSpace stock price forecast
The daily chart shows that the SquareSpace stock price has been in a strong bearish trend in the past few months. It has already crashed by more than 69% from its all-time high. It also remains below the 25-day and 50-day moving averages.
A closer look shows that the stock has formed what looks like an inverted head and shoulders pattern. In price action analysis, this pattern is usually a bullish signal.
Therefore, there is a likelihood that the stock will have a bullish break-out after it publishes its results on Monday. If this happens, the next key resistance to watch will be at $25. A drop below the key support at $15 will invalidate the bearish view.
