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Why Block Stock Crashed Today

By Rich Smith – Dec 16, 2021 at 2:16PM

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H&R Block waves cane angrily at the fintech and shouts, "Hey, kid, get off my lawn!"

What happened

It's been less than a month since fintech giant Square announced plans to change its name to Block (SQ -6.21%), a move that raised more than a few question marks in the thought bubbles over investor heads at the time. As Block stock tumbles 5% as of 1 p.m. ET, investors today are asking a different question:

"How soon will Block have to change its name right back to Square again?"

Person in chair surrounded by question marks under a large red arrow trending down.

Image source: Getty Images.

So what

So what's got Square -- I mean Block -- shareholders upset this time? Turns out, not everyone is happy with the company's name change, and one of the least happy campers is tax prep specialist H&R Block (HRB -2.68%).

I suspect you can see where this is going, but just to be safe, here's the lowdown: As H&R Block just announced, it has filed a trademark infringement suit against Block, alleging that the company "seeks to confuse customers by misappropriating the Block brand name" and "if allowed to proceed ... would improperly capitalize on the goodwill and consumer trust cultivated by Block since 1955."  

Now what

H&R Block is demanding that a court block -- er, enjoin -- Block from infringing on H&R Block's family of trademarks, pointing out that "the newly named Block, Inc. competes directly with Block in several areas of financial services, including tax preparation through its recent purchase of Credit Karma Tax, now called Cash App Taxes."

And once you realize that, it becomes pretty clear how things could get confusing in this market if the fintech is allowed to retain the Block name. I have to admit that I think H&R Block has a pretty good case here, which would be bad news for Square/Block.

But I also have to admit: It would also make things a whole lot easier for the rest of us if we could just go back to calling Square "Square" again.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool owns and recommends Block, Inc. The Motley Fool has a disclosure policy.

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