Block, Inc. (SQ) received a downgrade from UBS, shifting its rating from “Buy” to “Neutral” and significantly reducing the price target from $102 to $65.
The downgrade was driven by concerns about the limited upside potential for Block, particularly in terms of its digital payment platform. UBS analysts cited a focus on gross profit growth as a key area of concern for investors. They also connected the slowing gross profit growth to a softening in consumer discretionary spending, suggesting that this trend could negatively impact the company's performance.
Despite the downgrade, it's noteworthy that the stock initially saw more significant declines in premarket trading but had stabilized to a 0.25% decrease at the time of the discussion.
The stock's current valuation was mentioned, with shares trading near a five-year low in terms of certain multiples. The downgrade was seen as reflecting the anticipation of a slowdown in gross profit growth, which had already been priced into the stock.
SQ does not look good. Not good at all.. too many times it has sunk below 60 which means 60 will end up becoming resistance and this will drop below, much much below.
I’ve owned this stock for quite a long time, but two things they’ve done since that really bother me:
- Changed their name to Block and 2. Responsible for making the world have to tip on EVERYTHING. Seeing a monitor spin around at me with “asking you a question” when buying a brownie or apple juice makes me sour.
I have also owned some small capital fintech stocks and trust me as compared to SQ they have performed better. Stocks like HIVE SOFI OLB have given me a decent return as compared to SQ
OLB is worth just $10.63 million in the stock market, but it made nearly $31 million in sales last year.
Whereas SoFi Technologies had revenue of $1.85B in the twelve months ending June 30, 2023, with 48.01% growth year-over-year.
SQ really needs to hurry up and do a better job of connecting the ecosystems together. They've been talking it up now for well over a year and still, there has not been huge progress in terms of surfacing local square merchants in the cash app and incentivizing more purchases with those merchants either through cash card or through after-pay. Dorsey has spoken recently that he is a bit disappointed with the progress they've made to date there and they really do need to pull the finger out and get moving.
But still, I think SQ will be close to going up. It could go lower and if it does, then it is, perhaps a punchline to set the stage for a stronger rebound I hope, so I think it is an accumulation opportunity.
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