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TheStreet.com has published an article saying that Sq is massively over priced because of an accounting practice. I don't quite understand it and wonder if any Fools who own Sq can shed light.
Here's the gist of it:
"The majority of Sq's adjusted EBITDA gains have come from its share based compensation being backed into the EBITDA figure. Assuming that share-based compensation is a running cost of management (which it is), without this add-back, Sq's EBITDA figure would have actually fallen to 13 million in the Q3 2018 quarter"
"Lastly, we should bear in mind that this EBITDA figure also excludes SQ's annual capex requirements of 25 to 35 million. Consequently,, once capex is factored in , SQ is a cash burning machine that is mightily overpriced."
There it is Fools. Anyone have a comment?
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No. of Recommendations: 1
Current GAAP rules [foolishly] require deducting share-based compensation from profit. I say foolishly because the issuing of shares costs the company nothing ... it costs the shareholders by diluting their ownership. So, *everyone* backs out share-based compensation from non-GAAP earnings.

As for CAPEX, CAPEX is booked to Assets and depreciated, by *everybody*. It makes no sense to suddenly add it into current spending any more than it would make sense to exclude the annual depreciation from expenses.
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