What happened

Shares of Block (SQ 16.13%), which rebranded from the corporate name Square late last year, were down as much as 2% today. The stock did claw back those losses and was down only 0.3% as of 2:50 p.m. ET. Meanwhile, the S&P 500 and Nasdaq were sporting gains of 0.8% and 1.4%.  

Block is now more than 60% from its all-time high notched in 2021.  

A person holding a credit card and smartphone.

Image source: Getty Images.

So what

The reason for Block's stock underperformance today is likely due to Apple (AAPL -1.00%) officially unveiling a new feature for iPhone business users that allows them to accept digital payments with a simple tap of a credit or debit card, Apple Pay, or other contactless payment service. Rumors had been going around that Apple was about to announce this new service, and it's now official -- making Apple a more direct competitor to Block's core business.  

Apple's new feature (called Tap to Pay on iPhone) will roll out later in 2022. It essentially turns the iPhone into a digital payments terminal, freeing business owners of the need for extra point-of-sale hardware Block makes (assuming said businesses have an iPhone, of course). Private fintech giant Stripe will be the first to utilize Tap to Pay for its customers, which include e-commerce software company Shopify and its Point of Sale app.

Now what

Apple's move gives Block shareholders one more reason to worry after the drubbing they've endured in recent months. Hot air has been let out of the cryptocurrency market since the Federal Reserve indicated it's going to start raising interest rates this year, which hurts Block and its big bet on Bitcoin and its underlying blockchain technology

Nevertheless, Block is still a fast-growing company, and merchants are still steadily migrating over to more modern digital payment acceptance and money management technology. Apple's new Tap to Pay isn't going to undo Block, though it does create another value-added feature for Apple shareholders. 

The news has been overwhelmingly negative for Block and other tech stocks as of late, but the thesis for owning shares of the company hasn't really changed. If you originally invested for the long term, there's no reason to panic now and sell.