"Square is selling at Wal-Mart prices with Neiman Marcus cost structure," Wedbush wrote.

By Lucinda Shen
May 6, 2016
May 06, 2016

After Square’s first quarter earnings report, some investors questioned if the payment company had hit its peak.

Square sq , headed by Jack Dorsey who is also CEO of Twitter twtr , announced yet another quarter of declines Tuesday after hours, with a loss of 29 cents per share driven by higher operating expenses. That missed the Wall Street consensus, a loss of nine cents per share. Square’s revenue though, grew 51% year-over-year.

Shares of Square fell over 20% in trading Friday, as investors worried whether Square could grow amid heavy competition in the payment business from companies including PayPal and Intuit.

“We believe that Square is rapidly growing a business that may never reach peer (or guided) profitability, which will become apparent as growth slows over the next couple of years on competition and saturation,” a team of analysts led by Gil Luria, managing director at Wedbush, wrote. “We believe the total addressable market for Square is less than 5 million small to medium sized businesses, meaning Square is close to saturation.”

The Wall Street firm downgraded Square from neutral to underperform—Wall Street’s gentler way of saying sell, noting that “Square is selling at Wal-Mart prices with Neiman Marcus cost structure, in our opinion.”

On Thursday, investors were also keeping an eye out on Square’s new offerings, loans to small and mid-sized businesses, in the hopes of seeing a product that could catalyze future growth. But Square’s earnings report darkened that hope considerably. The company’s loan broker business reported year-over-year growth in revenue at 4%, saying it had trouble signing on new investors for the loan business—an industry-wide problem.

 

Square itself however raised its 2016 guidance to $8 million to $14 million in EBITDA, up from the previous guidance of $6 million to $12 million, saying its core payment business remained strong.

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