Square (NYSE:SQ) is a divisive stock for the bulls and bears. The bulls are impressed by its robust revenue growth and expanding ecosystem, but the bears scoff at its liberal use of non-GAAP metrics, its high valuation, and its weak defenses against growing competitors.

Square's recent third-quarter report gave the bulls and bears plenty of new reasons to argue. Let's weigh the good and bad points to see if Square's stock is still worth buying.

Square Register.

Image source: Square.

What the bulls will say...

Square's headline numbers clearly favor the bulls. Its total revenue rose 44% annually to $1.27 billion, while its "adjusted" revenue -- which excludes transaction-based costs, bitcoin costs, and deferred revenue adjustments -- rose 40% annually to $602.2 million and beat estimates by $5.4 million.

Square's GPV (gross payment volume), or the total value of all payments on its platforms, rose 25% to $28.2 billion. By comparison, PayPal's (NASDAQ:PYPL) TPV (total payment volume) also rose 25% to $179 billion last quarter.

On the bottom line, Square's adjusted EBITDA surged 85% to $131 million. Its net income, which was boosted by its sale of Caviar to DoorDash, rose 45% to $29 million. Its non-GAAP EPS nearly doubled to $0.25, beating estimates by a nickel.

Its subscription and services revenue surged 68% annually to $280 million and accounted for 22% of its GAAP revenue, thanks to the growth of its Cash App, Instant Deposit for sellers, and its financing arm Square Capital.

Within that total, its Cash App revenue (excluding bitcoin transactions) surged 115% annually to $159 million, indicating that it isn't struggling against rivals like PayPal's Venmo. Square's recent addition of free stock trades to Cash could further widen the app's moat. Meanwhile, Square Capital's loans, which tether merchants more tightly to its ecosystem, grew 39% year-over-year.

Square Register.

Image source: Square.

Square expects its adjusted revenue, excluding Caviar for both periods, to rise 37% annually in the fourth quarter. It expects its full-year revenue to rise 46% on the same basis, compared to its prior guidance for 44% growth.

It expects its adjusted EBITDA to grow 41% in the fourth quarter, and 61% for the full year, which marks a slight uptick from its prior forecast for 60% growth.

What the bears will say...

Those growth rates look solid, but the bears will likely note that Square's adjusted earnings forecast of $0.19-$0.21 per share missed the consensus forecast of $0.25. However, investors should recall that Square usually sandbags its guidance to temper analysts' expectations, so there's no reason for investors to think that it won't post a similar earnings beat in the fourth quarter.

Adjusted EPS

Q3 2018

Q4 2018

Q1 2019

Q2 2019

Q3 2019

Guidance

$0.08-$0.10

$0.12-$0.13

$0.06-$0.08

$0.14-$0.16

$0.18-$0.20

Actual

$0.13

$0.14

$0.11

$0.21

$0.25

Source: Square quarterly reports.

The bears will also likely note that Square still isn't consistently profitable on a GAAP basis, and its previous quarters of profitability over the past year were boosted by one-time events like Eventbrite's (NYSE:EB) IPO and Caviar's sale.

That's a valid point, but Square's revenue continues to grow at a faster rate than its operating expenses (up 29% year-over-year) as it wisely divests non-core assets like Caviar. It's also still sitting on $612 million in cash and equivalents, up 5% from the end of 2018, so it isn't burning cash at an unsustainable rate.

The bears will also note that Square faces a growing number of competitors, including Apple Pay, PayPal, the bank-backed Zelle network, and Europe's Adyen. That's true, but the war on cash remains in the early stages, so there might be plenty of room for all these platforms to grow without trampling each other.

Lastly, the bears will note that Square's growth is decelerating and that its valuation is too high at nearly 60 times forward earnings and nine times next year's sales. PayPal, which has lower growth rates than Square, trades at less than 30 times forward earnings and roughly six times next year's sales.

It's still a good speculative play

Square's stock isn't cheap, but I think that premium is justified for one of the top players in the booming fintech market. It should still be considered a speculative play instead of a core investment, but I believe brighter days are still ahead for this high-growth stock.