TLDR
- Block (XYZ) stock dropped 4.76% on Tuesday as PayPal’s weak earnings report spooked fintech investors across the sector
- PayPal missed Q4 revenue estimates at $8.68 billion versus expected $8.80 billion and withdrew its 2027 financial targets
- Block introduced Bitcoin payment acceptance for its Square merchant network of approximately 4 million U.S. sellers in November
- Technical indicators show Block trading 15.1% below its 20-day moving average with weak momentum and bearish pressure
- The stock has fallen 35.22% over the past year and sits closer to 52-week lows than highs
Block Inc. shares tumbled Tuesday morning as PayPal’s disappointing quarterly results sent shockwaves through the fintech sector. The payment processor’s stock fell 4.76% to $58.38 as investors worried about broader challenges facing digital payment companies.
PayPal reported fourth-quarter revenue of $8.68 billion, a 4% year-over-year increase that still missed analyst expectations of $8.80 billion. Earnings per share came in at $1.23, below the $1.28 consensus estimate. The Venmo parent announced Enrique Lores would take over as CEO on March 1, replacing Alex Chriss.
The real concern emerged during PayPal’s earnings call. CFO Jamie Miller said the company was abandoning its 2027 financial targets from last year’s investor day. She pointed to pressure across PayPal’s retail merchant business, especially among lower and middle-income consumers.
The news hit Block particularly hard. The company’s shares have already declined 35.22% over the past 12 months. Now trading closer to 52-week lows than highs, the stock faces continued headwinds.
Technical Weakness Persists
Block is currently trading 15.1% below its 20-day simple moving average and 19.1% below its 100-day moving average. These metrics point to sustained short-term weakness in the stock’s performance.
The relative strength index sits at 36.78, in neutral territory. However, the MACD indicator has dropped below its signal line, suggesting bearish pressure continues to build. Key resistance stands at $67.00, while support holds at $55.00.
Benzinga’s Edge rankings paint a mixed picture for Block. The growth rank scores an impressive 90.48, indicating strong potential ahead. The value rank of 78.34 suggests decent pricing relative to peers.
But the quality rank sits at just 22.41, raising questions about operational metrics. The momentum rank of 7.16 reveals weak near-term movement in the stock.
Bitcoin Push Offers New Direction
Block isn’t standing still despite the turbulence. In November, the company launched Bitcoin payment acceptance through its Square merchant platform. Small businesses can now accept cryptocurrency transactions from customers.
Square also introduced Bitcoin conversions. Merchants can automatically convert a portion of daily card sales into the digital asset. The feature works seamlessly for eligible U.S. merchants outside New York.
Block’s Square network served more than 4 million merchants as of late 2023. Most of its payment volume came from domestic transactions. That means millions of American small businesses now have access to Bitcoin functionality.
The move positions Bitcoin as more than just an investment vehicle. It’s becoming a practical payment option for everyday commerce. If adoption grows, other fintech companies might follow Block’s lead.
Competitor SoFi Technologies is also exploring Bitcoin integration. The digital bank plans to use the Lightning network for quick, affordable international payments. With 13.7 million customers, SoFi represents another major fintech player betting on crypto.
PayPal’s struggles highlight the challenges facing payment processors. Consumer spending pressure and economic uncertainty continue to weigh on the sector. Block’s Bitcoin initiative could provide differentiation in a crowded market.
The stock closed Tuesday’s session down while PayPal shares plunged 18.73%. Block’s market cap stands at approximately $37 billion as investors assess the company’s path forward.
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