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S&P 500   3,647.29 (-0.21%)
DOW   29,134.99 (-0.43%)
QQQ   274.89 (+0.19%)
AAPL   151.76 (+0.66%)
MSFT   236.18 (-0.53%)
META   134.45 (-1.41%)
GOOGL   97.46 (-0.72%)
AMZN   114.36 (-0.69%)
TSLA   283.06 (+2.55%)
NVDA   124.20 (+1.57%)
NIO   17.22 (-2.27%)
BABA   78.06 (-1.08%)
AMD   67.18 (+1.33%)
T   15.72 (+0.32%)
MU   50.63 (+3.58%)
CGC   2.87 (+4.74%)
F   11.87 (-1.00%)
GE   64.35 (+0.00%)
DIS   95.85 (-2.31%)
AMC   7.44 (+8.93%)
PYPL   85.72 (+1.73%)
PFE   44.09 (+0.59%)
NFLX   224.54 (+0.21%)
S&P 500   3,647.29 (-0.21%)
DOW   29,134.99 (-0.43%)
QQQ   274.89 (+0.19%)
AAPL   151.76 (+0.66%)
MSFT   236.18 (-0.53%)
META   134.45 (-1.41%)
GOOGL   97.46 (-0.72%)
AMZN   114.36 (-0.69%)
TSLA   283.06 (+2.55%)
NVDA   124.20 (+1.57%)
NIO   17.22 (-2.27%)
BABA   78.06 (-1.08%)
AMD   67.18 (+1.33%)
T   15.72 (+0.32%)
MU   50.63 (+3.58%)
CGC   2.87 (+4.74%)
F   11.87 (-1.00%)
GE   64.35 (+0.00%)
DIS   95.85 (-2.31%)
AMC   7.44 (+8.93%)
PYPL   85.72 (+1.73%)
PFE   44.09 (+0.59%)
NFLX   224.54 (+0.21%)
S&P 500   3,647.29 (-0.21%)
DOW   29,134.99 (-0.43%)
QQQ   274.89 (+0.19%)
AAPL   151.76 (+0.66%)
MSFT   236.18 (-0.53%)
META   134.45 (-1.41%)
GOOGL   97.46 (-0.72%)
AMZN   114.36 (-0.69%)
TSLA   283.06 (+2.55%)
NVDA   124.20 (+1.57%)
NIO   17.22 (-2.27%)
BABA   78.06 (-1.08%)
AMD   67.18 (+1.33%)
T   15.72 (+0.32%)
MU   50.63 (+3.58%)
CGC   2.87 (+4.74%)
F   11.87 (-1.00%)
GE   64.35 (+0.00%)
DIS   95.85 (-2.31%)
AMC   7.44 (+8.93%)
PYPL   85.72 (+1.73%)
PFE   44.09 (+0.59%)
NFLX   224.54 (+0.21%)
S&P 500   3,647.29 (-0.21%)
DOW   29,134.99 (-0.43%)
QQQ   274.89 (+0.19%)
AAPL   151.76 (+0.66%)
MSFT   236.18 (-0.53%)
META   134.45 (-1.41%)
GOOGL   97.46 (-0.72%)
AMZN   114.36 (-0.69%)
TSLA   283.06 (+2.55%)
NVDA   124.20 (+1.57%)
NIO   17.22 (-2.27%)
BABA   78.06 (-1.08%)
AMD   67.18 (+1.33%)
T   15.72 (+0.32%)
MU   50.63 (+3.58%)
CGC   2.87 (+4.74%)
F   11.87 (-1.00%)
GE   64.35 (+0.00%)
DIS   95.85 (-2.31%)
AMC   7.44 (+8.93%)
PYPL   85.72 (+1.73%)
PFE   44.09 (+0.59%)
NFLX   224.54 (+0.21%)

Financial services firm Block stock has fallen (-59%) in 2022

Financial services firm Block stock has fallen (-59%) in  2022Financial services firm Block (NYSE: SQ) stock has fallen (-59%) for 2022. The e-commerce processing and payments platform subsidiary Square expanded its services through acquisition and integrated them into its wildly popular Cash App mobile payment service. The Bitcoin Lightning Network was added to the Cash App enabling more access and flexibility to its digital wallets. The Company makes a transaction fee as well as the spread for Bitcoin, which accounted for nearly half of its Q1 2021 revenues when Bitcoin was riding high. Wall Street loved Block over PayPal (NASDAQ: PYPL) during the height of the crypto bull market but has turned 180 degrees in sentiment. The collapse of cryptocurrency markets have trashed Bitcoin revenues as they fell (-51%) to $1.73 billion in fiscal Q1 2022 causing total Q1 2022 revenues to tank (-21.7%). While so much of Bitcoin’s price action is tied to Block’s fate, the Company has also been integrating its Afterpay buy-now-pay-later (BNPL) acquisition. Afterpay contributed to the subscription and service-based revenues growing 72% to $960 million in the quarter. Markets may be pegging too much of Bitcoin’s price action to Block’s share price. Shares are still trading above pandemic lows but could revisit there if Bitcoin doesn’t find a floor at $20,000. Prudent investors that believe Bitcoin can rise from the ashes in the second half of the year and the Company can still grow its other segments like Afterpay can watch for opportunistic pullbacks in shares of Block.  

Q1 2022 Earnings Report

On May 5, 2022, Block reported its Q1 2022 earnings for the quarter ended March 2022. The Company reported earnings-per-share (EPS) profits of $0.18 falling short of consensus analyst estimates for $0.20, missing by (-$0.02). Revenues fell 21.7% year-over-year (YoY) to $3.96 billion falling short or the $4.14 billion consensus analyst estimates. Bitcoin revenues tanked (-51%) to $1.73 billion. Transaction based revenues rose 28% to $1.23 billion for a gross profit of $514 million, up 19% YoY. The Company processed $43.5 billion in GPV, up 31%. Subscription and services grew 72% YoY to $960 million with a gross profit of $764 million, up 63% including contributions from Afterpay. The Company acquired GoParrot, a digital ordering and marketing platform for restaurants.


Conference Call Takeaways

Block CEO Jack Dorsey touted the progress of Cash App in four areas including Cash App for Families, Trust, Afterpay and Bitcoin. The Cash App added FDIC insurance in April 2022 on all accounts with Cash App card. Afterpay is being integrated with Cash App driving more than 35,000 leads to Afterpay sellers in the quarter. Bitcoin access through Cash App has enabled over 10,000 account to buy Bitcoin and added the ability to send and receive Bitcoin through the Lightning network. The addition enables Bitcoin transactions to complete instantly rather than waiting up to 10 minutes to settle. The integration of Afterpay grew its seller base by 10% to over 20,000 sellers. They plan on making BNPL available for in-person payment soon.

Financial services firm Block stock has fallen (-59%) into the toilet for 2022

SQ Price Trajectories

Using the rifle charts on a weekly and daily time frame provides a precision view of the landscape for SQ stock. The weekly rifle chart breakdown is starting to stall out after coiling off the $59.04 Fibonacci (fib) level. The weekly downtrend has a flattening 5-period moving average (MA) at $65.28 followed by a falling 15-period MA at $85.49. The weekly stochastic is stalled at the 10-band to either cross up or mini inverse pup down. The weekly 200-period MA resides at $130.52. The weekly lower Bollinger Bands (BBs) sit at $30.59. The weekly market structure low (MSL) buy triggers on a breakout through the $71.01 level. The daily rifle chart has been compressing as evidenced by the inward upper and lower BBs at $73.42 and $55.37, respectively. Compression precedes and expansion. The direction is unknown yet. The daily 5-period MA is flat at $64.16 and 15-period MA at $65.56. The daily 50-period MA sits at $64.39. The daily stochastic has crossed down to test the 40-band. The stock is very volatile on its earnings report and therefore a larger price range is expected. Prudent investors can look for opportunistic pullback entry levels at the $59.04 fib, $54.51, $50.54 fib, $46.38 fib, $39.81 fib, $35.42, and the $32.33 fib level. Upside trajectories range from the $82.72 level up towards the $105.93 fib level.  

 

Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
PayPal (PYPL)
3.0048 of 5 stars
$85.70+1.7%N/A49.25Moderate Buy$134.23
Block (SQ)
2.4918 of 5 stars
$55.11+1.8%N/A-60.56Moderate Buy$135.76
Compare These Stocks  Add These Stocks to My Watchlist 

Should you invest $1,000 in Block right now?

Before you consider Block, you'll want to hear this.

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While Block currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys.

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Jea Yu

About Jea Yu

Contributing Author: Trading Strategies

With over 20 years of active participation and analysis of the US equities, options and futures markets, Mr. Yu brings fresh insights into the workings of the financial markets. He has published four books by esteemed publishers McGraw-Hill, John Wiley & Sons, Marketplace Books and Bloomberg Press. His brainchild, the Underground Trader, was voted Forbes Best of the Web for four consecutive years under the active trader category. He has been a featured speaker all over the country at various expos and seminars who enjoys a standing-room-only reception in the largest convention halls from New York to Las Vegas. He has been quoted and featured in USA Today, Wall Street Journal, Traders Magazine and the Financial Times and various trade publications like Stocks & Commodities, Active Trader and Online Investor. Mr. Yu has a B.A. in Liberal Arts and minor in Business Administration from the University of Maryland.
Contact Jea Yu via email at JeaYu21@gmail.com.
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