Squarespace filed for a direct listing last week. That's a quick way around listing shares on a public exchange without a drawn-out IPO process.

That means we will soon be able to trade Squarespace stock on brokerage apps like Robinhood or Stash.

The famous website building and hosting provider released its S-1 filing on April 16. The Squarespace ticker symbol will be "SQSP."

Despite operating in an immensely competitive industry, Squarespace has managed growing profitability and name recognition.

To see how this will hold up, let's look at the future of Squarespace stock and when to buy it.

What Is Squarespace?

You've probably heard the term "software as a service," also called SaaS, before. Any company that offers a subscription service to software falls under this umbrella.

Squarespace offers a particular software service called "web hosting."

In order to run, every website needs to be "hosted" somewhere on the web via servers owned by companies like Squarespace, GoDaddy, or BlueHost.

There are a ton of online hosting options for people and businesses looking to make their own websites. When you choose a hosting service, you choose the company that you pay to claim a "domain name," like MoneyMorning.com. This is usually a monthly or yearly fee.

Sometimes, the hosting service is paired with a web design service, making sort of an all-in-one toolkit to get a website up and running.

In other cases, a website builder might partner with other hosting companies, and they would direct customers to each other.

Squarespace, GoDaddy, Wix, and WordPress are all examples of companies that offer various design tools and hosting options for websites. Of course, they all have their pros and cons.

Squarespace stands out for its ability to make your website look visually stunning without any professional help. It offers more options than WordPress, for example, because the pre-made templates are more customizable, for significantly cheaper than WordPress.

Like WordPress, Squarespace started as a blog-hosting platform and grew from there. It raised over $78 million in venture funding in its first 10 years.

Today, users can start an e-commerce company through Squarespace with a few clicks of their mouse.

Many features Squarespace offers are accessible through other hosting and web design services, but the difference is in how they are accessed. The user experience is key, which is why visuals and ease-of-use has been such a major factor in Squarespace's growth.

The company was hosting more than 1 million websites by 2016. That's when it first started selling domains and competing directly with other big web hosting services.

So far, the company has managed to stand strong in its niche…

The Squarespace Financial Picture

Squarespace's last annual report showed revenue up 28% from $484 million to $621 million. Profits fell from $58 million to $30 million, but the company was profitable nonetheless.

A fall in profits is likely due to increased operating expenses as the company attempts to meet heightened demand for its services in the remote-work era.

The e-commerce industry grew 44% from 2019 to 2020 as everyone and their mother started buying and selling online.

Another great thing about Squarespace is that the company has a lot of cash. Operating cash flow grew 47% from 2019 to 2020.

This largely enables Squarespace to go the direct listing route instead of an IPO – they don't need to raise money by creating and selling new shares, because they have cash.

Squarespace subscriptions continue to grow as well. They climbed from 2.9 million to 3.6 million last year.

Should You Buy Squarespace Stock?

You kind of get the impression that Squarespace is far from finished. Its CEO, Anthony Casalena, is still very invested in the company, owning about 70%, and continues to steer it in his desired direction.

Remember, Casalena operated this company for a good three years before hiring any employees besides himself. This was and continues to be, a passion project. And that's a good sign for future growth in a stock.

Of course, that could be a source of friction as well, for voting stockholders who prefer to have input in a company's direction.

When it comes to profitability, however, opportunities to invest in a company with this much cash and stable growth can be rare.

This is still one of the foremost names in the web hosting market next to Wix.Com Ltd. (NASDAQ: WIX), GoDaddy Inc. (NASDAQ: GDDY), and WordPress. Its marketing has been so off-the-charts, it is easily one of the most recognizable names in the space.

And it continues to produce some of the most beautiful websites around for its ease-of-use.

The great thing about investing in this industry, as with much software, is that the market can be split in some unique ways. Fans of Squarespace will have different priorities than fans of Wix.

Wix users often want more flexibility in their designs, but the same visual potential. Squarespace users want a beautiful site in as little time as possible.

Wix has over 100 million sites. Squarespace has just over 3 million.

That gap will almost certainly close over the next few years when you think about how many more people are after convenience in their website building.

The expected valuation for Squarespace is about $10 billion, with lots of ceiling down the road. There will probably be a rush for Squarespace stock.

Shares of Wix are up 129% in the last year. It's valued at $16 billion and $988 million revenue. Since these companies are similarly valued, with similar growth prospects ahead, it gives us a hint to how Squarespace may perform after it goes public.

If the listing draws much hype, it could rise quickly. In a case where, say, Squarespace's value pops to $20 billion, you'll want to wait and see if you can get shares at a more affordable price.

If you can afford Squarespace stock before any hype bubble occurs, get in as soon as you can.