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‘Wild swing’: Jack Dorsey’s company stock erases staggering gains on Friday

'Wild swing': Jack Dorsey's company stock erases staggering gains on Friday

Block Inc. (NYSE: SQ), Square’s and Cash App’s parent company, opened May 4 with staggering gains following a positive earnings report. However, Jack Dorsey’s company stock retraced its gains as the day went on, closing the Friday with 10% losses.

Remarkably, Block Inc. shares closed May 3 at $70.30 but jumped 8.81% on Thursday’s extended session. Thus, SQ opened Friday trading at $76.49, gaining the stock market‘s spotlight with positive Wall Street forecasts.

Yet, further development suggests it was a bull trap, as the stock retraced on the New York Stock Exchange (NYSE). By the end of the day, SQ was trading at $69.47 per share, losing nearly 10% on May 4.

Block In.c (NYSE: SQ) daily price chart. Source: TradingView

In a post on X, Gurgavin Chandhoke, CEO of uINVST and stock market commentator, described this as a “wild swing.” This highly volatile price action happened after Jack Dorsey’s company reported positive results for the first quarter of 2024.

Block Q1 2024 earning report

Overall, Block Inc. surpassed expectations in the first quarter of 2024, achieving a gross profit of $2.09 billion. The company’s main business segments, Cash App and Square, demonstrated strong growth and exceeded analysts’ projections. Cash App’s gross profit rose 25% to $1.26 billion, while Square’s increased 19% to $820 million.

The Cash App saw a 6% increase in monthly transacting active users, reaching 57 million. Inflows per transacting active user also grew by 11% to $1,255, reflecting healthy trends in customer engagement. Block focused on enhancing Square’s product portfolio, particularly in the food-and-beverage vertical, and simplifying merchant onboarding.

Despite noting moderating same-store-sales growth for U.S. customers, Block remains watchful of broader trends. The company’s adjusted EBITDA reached $705 million, surpassing analysts’ expectations, partly due to discipline and efficiency in expense management.

Block raised its full-year outlook, anticipating $8.78 billion in gross profit and $2.76 billion in adjusted EBITDA. For the second quarter, the company expects gross profit between $2.165 billion and $2.185 billion and adjusted EBITDA ranging from $670 million to $690 million. The improved outlook reflects Block’s outperformance in Q1 and increased expectations for the remainder of the year.

Wall Street analysis on Jack Dorsey’s company stock: SQ

Analysts maintained positive ratings on Block, with many citing the company’s solid performance and cost discipline. 

In particular, JP Morgan analyst Tien-tsin Huang maintained an Overweight rating and a price target of $90 per share for SQ. Other Wall Street forecasts reported on TradingView range from $92 to $106 per share despite Friday’s negative closing.

Nevertheless, JMP Securities analyst Andrew Boone took a more cautious position, highlighting the importance of further data and positive developments.

“While we acknowledge Cash’s progress in winning deposits, we look for greater confirmation in the sustainability of these before we become more positive.”

– Andrew Boone

This cautious stance is valuable, considering Federal prosecutors are examining Jack Dorsey’s company due to allegedly processing crypto transactions for terrorist groups and nations subject to economic sanctions, as reported by NBC News on May 1.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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