Square Shares Plummet After Analyst Downgrade

Shares of Square Inc. plummeted 23% in premarket trade Friday after Wedbush Securities downgraded the stock to underperform from neutral. "We believe that Square is rapidly growing a business that may never reach peer (or guided) profitability," the analysts wrote. The downgrade came a day after Square reported first-quarter earnings. The analysts expect growth in Square to decrease among competitors such as PayPal and add that Square has a high cost structure while selling at "Wal-Mart prices." The lockup expiration of 64 million options and warrants expires on May 16, which the analysts see as being the beginning of the downfall. The analysts reduced their price target to $9 from $11.