Block Inc. Faces Longest Losing Streak

by Warren Seah

Shares of financial-technology company SQ (-2.15%) are experiencing a prolonged losing streak, signaling a management transition ahead. In Friday’s trading, the stock was down 1.4%, marking its eighth consecutive session in decline. This losing streak is the longest since January 27, 2022, when it dropped for 11 consecutive days according to Dow Jones Market Data.

During the current eight-session stretch, Block’s stock has plummeted by 17.2%, on track to register its lowest close since April 3, 2020. Although technology shares in general have felt some pressure during this period, Block’s shares have been hit even harder.

Investors have not responded positively to Block’s recent announcement regarding Alyssa Henry, a respected veteran within the company, and head of the Square merchant business, stepping down. Jack Dorsey, who leads Block, will now take on her responsibilities along with his own.

Analysis of Henry’s Departure and its Impact on Square

by Lisa Ellis, SVB MoffettNathanson Analyst

Henry’s departure from Square may be an indication of the recent sluggish performance of the company. It is difficult to interpret it otherwise. As an analyst, I am concerned about the health of Square’s business and will be closely monitoring Dorsey’s approach to address the challenges.

Improving Distribution Model and Omnichannel Tools

One area that requires attention is Square’s distribution model for larger merchants. The company needs to improve this aspect to better serve its clients. Additionally, Square’s omnichannel tools, including online ordering, need further development. These enhancements are crucial to stay competitive in the market.

Accelerating International Growth

Square’s international growth is another area to keep an eye on. The markets abroad are more fragmented but less competitive. Square should focus on expanding its presence in these markets and capitalizing on the opportunities they offer.

by Dan Dolev, Mizuho Analyst

Renewed Focus on Point of Sale (POS) Business

Dorsey’s decision to shift his focus back to the point of sale (POS) business can have a significant positive impact in the long run. By dedicating less time to Bitcoin and putting more emphasis on Square’s core business, he can leverage his unique brilliance in building viral networks.

It is worth noting that a year ago, I downgraded Block’s stock due to concerns about its disproportionate focus on Bitcoin. Dorsey’s renewed focus on the POS business is a welcome change.

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