Website Building » Squarespace » Why Is Squarespace Stock Dropping?

Why Is Squarespace Stock Dropping?

Last updated on October 1, 2022 @ 10:01 am

Since going public in April of last year, shares of Squarespace (NYSE:SQSP) have lost nearly 60% of their value. While the company reported strong revenue growth in its most recent quarter, it also posted a wider-than-expected net loss. With concerns mounting about its ability to generate sustainable profits, investors have been fleeing the stock.

One of the biggest problems facing Squarespace is that it is losing money on every sale. The company’s gross margin was just 31% last quarter, down from 33% a year ago. This deteriorating margin profile is a big concern for investors, as it suggests that Squarespace may not have the pricing power necessary to generate long-term profitability.

What’s more, Squarespace’s revenue growth is starting to slow down. The company’s top line rose 33% last quarter, down from 39% growth in the prior quarter.

This slowdown comes as competition in the website builder space intensifies. Shopify (NYSE:SHOP), for example, reported 63% revenue growth last quarter.

PRO TIP: Squarespace is a publicly traded company on the New York Stock Exchange (NYSE) under the ticker symbol SQSP. Shares of Squarespace dropped sharply on Thursday after the company announced it was selling $100 million in stock to help fund its growth. The stock sale came as a surprise to investors, who were already worried about the company’s slowing growth.

Investors are also worried about Squarespace’s high level of debt. As of the end of March, the company had $238 million in long-term debt on its balance sheet. This gives Squarespace very little financial flexibility if its business starts to deteriorate.

With concerns mounting on multiple fronts, it’s no wonder why investors are running for the exits. Until Squarespace can prove that it can generate sustained profitability, the stock is likely to remain under pressure.

Why is Squarespace stock dropping In short, the company is losing money on every sale, margins are deteriorating, revenue growth is slowing down, and it has a high level of debt.

Dale Leydon

Dale Leydon

Sysadmin turned Javascript developer. Owner of 20+ apps graveyard, and a couple of successful ones.