SQ Stock: Buy or Sell? Bears Focus on Afterpay Risk, While Bulls Target Margin Growth

Sq stock

The digital currency known as Bitcoin immediately comes to mind when considering SQ stock. There is also a significant purchase for Square stock (NYSE:SQ) to consider, in addition to a rebranding of the company itself.

One question that arises among growing concerns of a recession in the United States is: how resistant would Square’s parent company, Block Inc. (NYSE:SQ), be to a commercial slowdown compared to other digital payment companies? Additionally, as of September 25, the price of Bitcoin has once more fallen below an important level of $19,000.

In the meantime, the share price of Block Inc. has dropped by almost 65% in 2022. During intraday trading on September 23, Square Company stock reached a new 52-week low price of 54.43. SQ stock has underperformed in comparison to the performance of the S&P 500, which has decreased by roughly 23%.

On January 31, Square successfully completed the acquisition of Afterpay, a consumer financing business based in Australia. Its rate of expansion has slowed down. Additionally, “buy now, pay later” (BNPL) fintech companies such as Afterpay are being subjected to an increased level of regulation.

On September 22, the shares of Block were lowered to a neutral rating by analyst Dan Dolev of Mizuho Securities.

Dolev stated in a research that “After years of deservedly being regarded as the most inventive name in payments, we feel that user fatigue, plateauing inflows, loss of the best-of-breed, point-of-sale status, and BNPL mis-execution are limiting SQ’s growth.”

“SQ is capable of realizing a significant portion of its vast potential. Instead, BNPL predictions continue to decrease, and ventures like Bitcoin, which only accounts for five percent of gross profit, appear to disproportionately preoccupy management’s attention, he noted.

Square Stock (Sq Stock): Earnings Mixed

Earnings and revenue for the June quarter reported by Square dropped compared to the same period a year ago but above analysts’ expectations. There was a drop in operating profit as well as gross payment volume.

EBITDA, which stands for earnings before interest, taxes, depreciation, and amortization, came in significantly higher than anticipated.

Deutsche Bank analyst Bryan Keane said, “The company has pushed back on experimental and less efficient spend.” “In addition, the company has adjusted its risk loss modeling and slowed its hiring rate.” We believe that SQ stock is positioned for meaningful margin increases in 2023 and 2024 as a result of its scale and a new emphasis on cost discipline.

To establish a digital payments ecosystem that is two-sided, with solutions geared for both merchant sellers and consumer purchasers, Square stock’s (Sq Stock) primary business objective is to increase its share price. The Square Cash App provides users with a variety of financial management and investment options, including the ability to buy stocks and cryptocurrency.

The expansion of Cash App users and monetization of that growth is essential to the outlook for SQ stock. During the coronavirus outbreak and in conjunction with the government’s economic stimulus, Cash App saw explosive development. The pessimistic outlook predicts that Cash App’s user growth will moderate as the economic environment in the United States becomes more typical.

Block Inc Stock (SQ Stock): The Rebranding of the Corporation

On December 1, the company that was formerly known as Square changed its name to Block Inc (Sq Stock), but it maintained the ticker symbol SQ. This choice was made in part as a reflection of the company’s commitment to blockchain technology, which is the technology that forms the basis of cryptocurrencies like bitcoin and ethereum. The price of SQ stock has dropped by 73% ever since the company decided to change its name to Block.

On the other hand, the price of Bitcoin hovered close to $19,130 on September 24. 


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About the author: Valerie Ablang is a freelance writer with a background in scientific research and an interest in stock market analysis. She previously worked as an article writer for various industrial niches. Aside from being a writer, she is also a professional chemist, wife, and mother to her son. She loves to spend her free time watching movies and learning creative design.