Is Squarespace Stock A Buy After Its “IPO”?

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.

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Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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