Down 17% since its Recent IPO, Is Squarespace (SQSP) Worth Investing In?

Creating a website used to be a complicated process. Today, there are platforms that allow even the most novice internet users to create stunning websites for their brand, product or service…

Squarespace, Inc. (SQSP), which recently went public, is one such platform.

SQSP provides software as a service (SaaS) for website building and hosting, and allows users to use pre-built website templates along with drag-and-drop elements to create personalized web pages.

In addition to allowing its users to create and host websites, the company also provides tools for e-commerce, managing a social media presence, marketing, and scheduling capabilities. Through its commerce solutions, it provides its customers everything they need to sell physical products, subscriptions, content, or services online. Its marketing solutions include email campaigns, customer relationship management functionalities, search engine optimization (SEO), and analytics tools to help its customers understand and target their audiences while driving traffic, sales and conversion.

SQSP’s stock performance since its direct listing on the NYSE in May 2021 has disappointed investors, as the stock slipped 17.8%, underperforming the S&P 500 which has advanced 8.4% over the last 6 months.

However, SQSP is exposed to several key digital trends that should boost its activity in the next period. In this article, I will analyze the company’s fundamentals to see if the company makes for a worthwhile investment.

SQSP has been growing its business consistently in the past years, but its financials have suffered from its direct listing and the acquisition of Tock.

Fundamentals for the website specialist appear fragile. In terms of the top-line, SQSP is expected to grow at a fast pace, as analysts expect net sales to increase by 25.4% to $779m in 2021 and by another 20% to $935m in 2022. On the other hand, SQSP is anticipated to deliver a net loss of $231m in 2021, compared to revenues of $306m the preceding year.

This is mainly attributable to operating expense increasing, which is expected to surge 70.3% year-on-year to $821.9m in 2021, following its direct listing costs. Nevertheless…

 

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