Big Stocks Slip After Crypto Winter Cracks Quarterly Results


Aug 5 (Reuters) – Jack Dorsey-led Block Inc (SQ.N), a digital payments firm that has made a big bet on bitcoin, reported a loss on Friday in quarterly results The company’s shares fell nearly 7% in premarket trading on Friday. Interest in cryptocurrencies wanes.

As of 6:20 a.m. ET, the San Francisco, California-based company had lost nearly $3.5 billion in market value. The stock has fallen more than 44% this year.

Block reported Thursday a loss of 36 cents a share in the second quarter, compared with a profit of 40 cents last year, and said it had slowed the pace of hiring and cut its 2022 investment target by $250 million.read more

Sign up now for free and unlimited access to Reuters.com

“The spending cuts suggest that SQ is bracing for a potential slowdown in growth,” JPMorgan analysts wrote in a note.

However, the brokerage maintained its “overweight” rating and $107 price target on the stock, citing the potential earnings potential of its buy now, pay later business, which earned $150 million in gross profit in the quarter.

Investor enthusiasm for bitcoin and other digital currencies has faded this year as blistering inflation and tightening monetary policy by the Federal Reserve have led to a sell-off in risk assets.

That hurts companies like Block, which rode the Bitcoin frenzy to post strong earnings last year.read more

Block’s gross bitcoin profit — or the profit the company makes from the spread between buying and selling the cryptocurrency — plunged 24% to $41 million this quarter, from $55 million a year earlier.

Analysts at BTIG said: “Shares are up nearly 35% in the eight sessions before printing. The company may need to produce an almost flawless report to continue this surge.”

However, Jefferies and RBC Capital Markets raised their price targets, saying Bullock’s decision to cut costs would put it in a strong position to navigate a difficult economic environment.

Sign up now for free and unlimited access to Reuters.com

Reporting by Niket Nishant in Bengaluru; Editing by Shinjini Ganguli

Our standard: Thomson Reuters fiduciary principles.



Source link

Leave a Reply

Your email address will not be published.