Jack Dorsey’s Block stock price remains under pressure this month as concerns about the company’s growth continued. XYZ dropped to $55.9 on Friday, down by over 30% from its highest point last year.
Block Stock Has Dropped Amid Concerns About Its Growth
Block is a top fintech company offering several solutions to businesses and retail users. It is well-known for Square, a solution that enables companies to accept payments in physical and online stores.
Block also runs AfterPay, one of the biggest players in the Buy Now, Pay Later (BNPL) industry. It also owns Cash App, a popular peer-to-peer payment solution in the United States. Its other solutions are TIDAL, BitKey, and Proto.
Like PayPal, Block’s business has slowed substantially in the past few years. Competition across all its businesses has jumped, with BNPL firms like Affirm and Klarna gaining market share. Also, companies like Stripe are accelerating their competition in the cash processing industry.
The most recent results showed that its revenue jumped to $24.19 billion last year from $24.12 billion a year earlier. This revenue growth is a sign that the company’s business has slowed.
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On the positive side, the gross profit jumped from $8.8 billion to $10.35 billion a year earlier. The management hopes that its gross profit will jump to $12 billion, partly because of its massive job cuts. It is slashing over 4,000 workers as it embraces artificial intelligence (AI) into its operations.
On the positive side, there are signs that the company has become undervalued. It trades at a forward price-to-earnings (PE) multiple of 15, much lower than the S&P 500 Index, which has a multiple of 23. It is also lower than its five-year average of 58.
The challenge, however, is how to transform this cheap valuation into a good investment considering that its revenue growth has stalled. Analysts anticipate that its revenue will grow by less than 10% this year to $26.5 billion.
XYZ Stock Price Technical Analysis
The daily chart shows that the XYZ share price has slumped in the past few months. It has dropped from a high of $82.30, its highest point last year to the current $55.9. Most recently, the stock jumped to $67 after publishing its earnings and announcing its layoffs. It has now pulled back and is aiming to fill the gap.
Block stock has dropped below the 61.8% Fibonacci Retracement level. It also remains below all moving averages, while the Relative Strength Index (RSI) and the MACD have all pointed downwards.
The most likely scenario is where it continues its downward trend, potentially to the year-to-date low of $48. Such a move would imply a 14% drop from the current level.
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