When Can We Expect A Profit From Squarespace, Inc. (NYSE:SQSP)?

We feel now is a pretty good time to analyse Squarespace, Inc.'s (NYSE:SQSP) business as it appears the company may be on the cusp of a considerable accomplishment. Squarespace, Inc. operates platform for businesses and independent creators to build online presence, grow their brands, and manage their businesses across the internet. The US$2.7b market-cap company posted a loss in its most recent financial year of US$250m and a latest trailing-twelve-month loss of US$341m leading to an even wider gap between loss and breakeven. As path to profitability is the topic on Squarespace's investors mind, we've decided to gauge market sentiment. Below we will provide a high-level summary of the industry analysts’ expectations for the company.

View our latest analysis for Squarespace

Squarespace is bordering on breakeven, according to the 16 American IT analysts. They expect the company to post a final loss in 2022, before turning a profit of US$29m in 2023. So, the company is predicted to breakeven just over a year from now. In order to meet this breakeven date, we calculated the rate at which the company must grow year-on-year. It turns out an average annual growth rate of 48% is expected, which signals high confidence from analysts. If this rate turns out to be too aggressive, the company may become profitable much later than analysts predict.

earnings-per-share-growth

We're not going to go through company-specific developments for Squarespace given that this is a high-level summary, but, bear in mind that generally a high growth rate is not out of the ordinary, particularly when a company is in a period of investment.

Before we wrap up, there’s one issue worth mentioning. Squarespace currently has negative equity on its balance sheet. Accounting methods used to deal with losses accumulated over time can cause this to occur. This is because liabilities are carried forward into the future until it cancels. These losses tend to occur only on paper, however, in other cases it can be forewarning.

Next Steps:

There are key fundamentals of Squarespace which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Squarespace, take a look at Squarespace's company page on Simply Wall St. We've also compiled a list of key aspects you should further research:

1. Valuation: What is Squarespace worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Squarespace is currently mispriced by the market.

2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Squarespace’s board and the CEO’s background.

3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.