Although it had performed well in 2015 and beyond, this stock crashed heavily in 2022 as the company reported slowing growth and quarter after quarter of financial losses. Overextension into emerging markets, high inflation, and crypto winter stomped its stock price into the ground. However, this dark horse has begun showing signs of recovery and is now racing to the top as its financial status gets better and better.
Today’s surprise surge stock is Block, Inc. (NYSE: SQ) and this article will cover its ongoing rise to prominence.
The plunge to the bottom
Wall Street analysts favored Block in 2021 because its ventures into Bitcoin (BTC) reflected the optimism of the bullish crypto market. However, the following collapse of Bitcoin literally upended this sentiment, and grim predictions clouded the fintech company. Following Block’s Q1 2022 financial report, the Block stock price fell by a whopping -59% in mid-2022.
Crypto winter was not the sole reason for the sudden drop, as rising interest rates also dealt a major blow to the company. The Fed’s near-zero interest rate policy, designed to tackle the consequences of the global pandemic, was sharply reversed, and the highly valued price of Block stock plummeted.
Additionally, many investors were skeptical of the company’s bet on cryptocurrency, mainly Bitcoin. In fact, in December 2021 the company rebranded from Square to Block to highlight its dedication to the blockchain cause. Coupled with the Bitcoin crash, investors seemed to get cold feet.
In light of these events, many investors lost confidence in Block stock, which led to its price bottoming out.
Block’s surprise surge
The fintech company’s unfortunate streak seems to have ended. In 2023, the crypto market showed a bullish trend, and many believe that 2024 will set a record high for Bitcoin’s price, potentially more than $80,000.
Block’s many ventures rely on cryptocurrency’s performance, including TBD, a decentralized platform for DeFi applications and blockchain programming support, and Bitkey, a self-custody cryptocurrency hardware wallet launched in December 2023. Furthermore, its primary financial products, Square and Cash App, support and encourage Bitcoin payments, highlighting the company’s focus on the digital currency. Its Q3 2023 reports started showing profits for the first time in a while, with a 24% increase in revenue to $5.62 billion and a 21% spike in gross profit to $1.9 billion, and its Q4 2023 report reinforced the positive trend with a 24% jump in net revenue to $5.77 billion and a 22% hike in gross profit to $2.03 billion.
Apart from positive crypto news, there are more indicators that Block is on the right track. New growth markets the company invested in before have started bearing fruit, and the company stands to benefit from the ongoing trend of the democratization of finance. Block’s relatively cheap acquisition of Tidal gives it access to the booming music creator industry, though how exactly the company will utilize this asset remains unclear.
Finally, the founder of Square (now Block), Jack Dorsey, retook the helm of the company as CEO in October 2023, as CEO Alyssa Henry stepped down. The move will likely strengthen the management and provide a steady course for the company’s future progress.
Is Block’s stock undervalued?
As of writing, Block stock price remains undervalued as it has yet to correct itself to match the company’s reinvigorated financials.
Block stock price
As of April 17, 2024, Block stock price is $73.50, representing a -3.13% year-to-date decline but a 64.80% surge when compared to six months ago.
About Block
Founded in 2009, the company launched Square, a financial services platform from which it would derive its name. It catered to small- and medium-sized businesses and integrated tablets into its e-commerce and traditional financial services. Afterward, it added more services to its portfolio, including Cash App, a peer-to-peer transaction platform that also allows investing in stocks and Bitcoin, and Afterpay, a “buy now, pay later” service. Furthermore, it owns TBD, Bitkey, and Tidal.
Block’s stock is a component of the Rusell 1000 index. It trades on the NYSE under the SQ ticker.
Block stock forecast 2025
No one knows for sure how long it will take before the Block stock price catches up to its real value, but analysts think this will happen sooner rather than later.
Benefiting from its smart investing decisions and the Bitcoin price rally, Block has managed to surprise investors and once again become a potentially lucrative investment option, especially for crypto-oriented and fintech-savvy investors. If you are thinking about investing in Block, however, remember to take into account the Bitcoin perspective as well. Remember to do your own research before investing.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
The post Surprise surge: This dark horse is racing to the top appeared first on Finbold.
