Financial service provider Block (NYSE: SQ) stock has fallen (-59%) in the toilet for 2022. The e-commerce processing and payment platform subsidiary Square expanded its services through acquisition and integrated them into its wildly popular mobile payment service Cash App. The Bitcoin Lightning Network has been added to the Cash app, allowing greater access and flexibility to its digital wallets. The company charges transaction fees as well as the spread for Bitcoin, which accounted for nearly half of its revenue in the first quarter of 2021 as Bitcoin rode high. Wall Street Loved Block About PayPal (NASDAQ: PYPL) during the peak of the crypto bull market, but sentiment has turned 180 degrees. The collapse of the cryptocurrency markets has devastated Bitcoin revenues as they fell (-51%) to $1.73 billion in the fiscal first quarter of 2022, pushing total revenues down (-21. 7%). While so much of Bitcoin’s price action is tied to Block’s fate, the company has also integrated its acquisition of Afterpay buy-now-pay-later (BNPL). Afterpay contributed to the subscription and services-based revenue grew 72% to $960 million in the quarter. Markets may be linking too much of Bitcoin’s price action to Block’s stock price. The above stocks are still trading pandemic lows, but could revisit there if Bitcoin doesn’t bottom at $20,000. Cautious Investors Who Believe Bitcoin Can rise from the ashes in the second half of the year and the company can still grow its other segments, as Afterpay can look at opportunistic pullbacks in Block’s stock.
Profit report Q1 2022
On May 5, 2022, Block reported its first quarter 2022 earnings for the quarter ended March 2022. The company reported earnings per share (EPS) of $0.18 which was below consensus analyst estimates of $0.20. which was missing by (-$0.02). Revenues were down 21.7% year-on-year (year-on-year) to $3.96 billion, inconsistent with consensus analyst estimates of $4.14 billion. Bitcoin revenue fell (-51%) to $1.73 billion. Transaction-based revenue increased 28% to $1.23 billion for gross profit of $514 million, up 19% year over year. The company processed $43.5 billion in GDP, up 31%. Subscriptions and services grew 72% year-over-year to $960 million grossing $764 million, a 63% increase including contributions from Afterpay. The company acquired GoParrot, a digital ordering and marketing platform for restaurants.
Takeaway for conference calls
Block CEO Jack Dorsey praised Cash App’s progress in four areas, including Cash App for Families, Trust, Afterpay and Bitcoin. The Cash App added FDIC insurance to all accounts with a Cash App card in April 2022. Afterpay integrates with the Cash app, generating over 35,000 leads to Afterpay merchants in the quarter. Bitcoin access through the Cash app has enabled more than 10,000 accounts to buy Bitcoin and added the ability to send and receive Bitcoin through the Lightning network. The addition allows Bitcoin transactions to be completed immediately instead of waiting up to 10 minutes to settle. With the integration of Afterpay, the seller base grew by 10% to more than 20,000 sellers. They plan to make BNPL available for personal payment soon.
SQ Price Ranges
Using the gun cards on a weekly and daily timeframe provides an accurate picture of the landscape for SQ stocks. Weekly Gun Chart Breakdown Starts To Stag After Settling The $59.04 Fibonacci (fib) level. The weekly downtrend has a flattening 5-period moving average (MA) at $65.28, followed by a 15-period declining MA at $85.49. The weekly stochastic is held on the 10 band to either cross over or mini-inverse pup-down. The weekly MA of 200 periods is $130.52. The weekly lower Bollinger Bands (BBs) are at $30.59. the weekly market structure layer (MSL) buy triggers when it breaks through the $71.01 level. The daily gun chart is compressed as evidenced by the inward upper and lower BBs at $73.42 and $55.37, respectively. Compression precedes and expansion. The direction is not yet known. The daily 5-period MA is stable at $64.16 and the 15-period MA at $65.56. The 50-period daily MA stands at $64.39. The daily stochastics has been crossed to test the 40 band. The stock is highly volatile on its earnings report and therefore a larger price range is expected. Cautious 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. Upward trajectories range from the $82.72 level to the $105.93 fib level.