Block Shares Slip After Crypto Winter Mutes Quarterly Results

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Block reported a loss of 36 cents a share in the second quarter on Thursday.

Shares of Jack Dorsey-led Block Inc, a digital payments company that has bet big on bitcoin, fell nearly 7% in premarket trading Friday after the company reported a loss in quarterly earnings on dwindling interest in cryptocurrencies.

The San Francisco, California-based company saw nearly $3.5 billion wiped from its market value at 6:20 a.m. ET. The stock has fallen more than 44% this year.

Block reported on Thursday a loss of 36 cents a share in the second quarter, compared to a gain of 40 cents last year, and said it had slowed hiring and would lower its 2022 investment target by $250 million.

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“Reducing spending suggests SQ is bracing for potentially weaker growth,” JPMorgan analysts wrote in a note.

However, the brokerage maintained its “overweight” rating and price target of $107 for the stock, citing the underlying earnings potential of its buy now, pay-later business, which grossed $150 million in the quarter.

Investor enthusiasm for bitcoin and other digital currencies has waned this year, as red-hot inflation and the Federal Reserve’s tightening of monetary policy have led to a sell-off of risky assets.

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That hurt companies like Block, who rode the bitcoin frenzy last year to post robust earnings.

Block’s gross profit from bitcoin — or what the company earns from the spread when buying and selling the cryptocurrency — plummeted 24% in the quarter to $41 million, from $55 million a year earlier.

“Shares were up nearly 35% in the eight trading sessions prior to the press. The company would likely have had to produce a nearly flawless report to continue that gain,” BTIG analysts said.

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However, Jefferies and RBC Capital Markets raised their price targets, saying that Block’s decision to cut costs would put them in a strong position to face a tough economic environment.

(This story was not edited by The Switzerland Times staff and was generated automatically Platforms.)

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