Why Square Inc's Shares Popped 18% Today

By Travis HoiumMarketsFool.com

What happened

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Shares of mobile payment company Square Inc (NYSE: SQ) jumped as much as 18% in trading Thursday after the company reported fourth-quarter earnings. At 12:10 p.m. EST shares were up 13.2% on the day.

So what

Square reported a 21% increase in revenue to $452 million in the fourth quarter and a 43% increase in adjusted revenue to $192 million. The company still lost $15 million, or $0.04 per share, but EBITDA for the quarter was $30 million, the most since becoming a public company.

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Image source: Square.

Analysts were only expecting $449.8 million in revenue and a $0.09 loss per share, so results topped that bar by a wide margin. And guidance of $880 million to $900 million of adjusted revenue and adjusted net income of $0.15 to $0.19 per share in 2017, which came in ahead of expectations.

Now what

The hope for Square is to be able to build a platform small companies can use as a foundation, and continually add customers to that base while operating costs grow more slowly. That strategy played out nicely in the fourth quarter and management expects more momentum in 2017.

I don't think there's anything stopping mobile payments from taking over the payment market and Square is a leader in the space. This is a stock with a bright future and the improving financials are another sign that Square is on the right path.

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Travis Hoium has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.