What happened
Shares of fintech leader Block (SQ 2.40%) -- the artist formerly known as Square -- dropped in Monday morning trading. And yes, it kind of feels like the whole stock market is down today, but with a 4.5% decline as of 11:50 a.m. ET -- versus a decline of "only" 1.8% on the S&P 500 -- Block stock is doing a whole lot worse than most.
You can blame investment bank Wedbush for that.
Image source: Getty Images.
So what
Coronavirus worries are tanking the stock market this morning, and coronavirus worries make up a big part of why Wedbush just cut its price target on Block stock by 24%, to $190 a share.
The omicron variant of COVID-19 has spread across 45 of America's 50 states, reports CNN this morning, and popped up in more than 90 countries around the world. While it's still not 100% clear how serious the health risks of the new virus are, it's crystal clear that omicron is super-contagious, and that's spooking both stock market analysts and consumers.
Now what
Wedbush warns of "choppy" consumer spending as shoppers potentially hunker down and pull back on their spending in the crucial shopping days just before Christmas. Further out, worries surround trends in travel potentially slowing (reducing one-time, big-ticket purchases of services such as airplane tickets and hotel reservations), and brick-and-mortar stores being forced to close once again (which might depress spending more broadly).
And of course, there are the inflation concerns. The higher prices go, the less investors are going to be inclined to spend on anything beyond the bare necessities.
Combined, this all adds up to a bleak outlook for a company like Square, which depends on rising consumer spending to drive its revenue growth. No wonder Wedbush is worried. No wonder everyone else is worried, too.
