Square Competition Concern Intensifies as Key Customer Bails

(Bloomberg) -- Square Inc.’s loss of Joe & the Juice A/S as a customer has sparked concerns on Wall Street that competition for larger sellers is heating up.

While the revenue contribution from the closely-held Danish company is "relatively immaterial" for Square, it has previously been cited as a "key customer case" of how Square is gaining larger customers, Morgan Stanley analyst James Faucette wrote in a note.

"As Square enters this market, it is not only competing on price, but also on hardware capabilities and breadth of offerings," the analyst said.

Square shares have been under pressure this month after disappointing earnings sparked growth concerns. The stock has gained 11% this year so far but remains down 27% over the past 12 months.

Faucette, who has an equalweight rating on Square, said recent commentary indicates Joe & the Juice moved to competitor Adyen to gain a single global processor across all of its international markets. That suggests Square is still in the early days of developing its brand power in global markets and is less likely to offer a competitive advantage internationally, the analyst said.

16 analysts rate Square the equivalent of buy, while 18 rate it at the equivalent of hold and 4 at sell, according to data compiled by Bloomberg.

To contact the reporter on this story: Tatiana Darie in New York at tdarie1@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Morwenna Coniam

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