The stock market produced an impressive intraday reversal on Thursday, fully recovering from losses of as much as 3% early in the day to finish solidly higher. Despite the Russian invasion of Ukraine, investors seemed to focus on the relatively measured response from Western leaders, who avoided some of the more aggressive actions that could have escalated the situation. By the end of the session, the S&P 500 (^GSPC 0.11%), Dow Jones Industrial Average (^DJI 0.56%), and Nasdaq Composite (^IXIC +0.35%) were all higher, with the biggest gains going to the Nasdaq.
|
Index |
Daily Percentage Change |
Daily Point Change |
|---|---|---|
|
Dow |
+0.28% |
+92 |
|
S&P 500 |
+1.50% |
+63 |
|
Nasdaq |
+3.34% |
+436 |
Data source: Yahoo! Finance.
Tech-focused stocks with exposure to payments and e-commerce have been among the hardest hit companies in the market in recent months. However, following the end of the regular trading session, positive earnings reports from Block (SQ 0.78%) and Etsy (ETSY 1.37%) sent their stocks soaring more than 20% each in after-hours trading. Let's look more closely at both reports to see what the two companies said.
Block gets its groove back
Shares of Block finished the regular session up 7% after having dropped as much as 7% early in the day. After hours, Block added another 23% gain as investors liked what they saw in the company's fourth-quarter financial report .
Block's results were impressive. Gross profit climbed 47% year over year, including 54% growth for the Square ecosystem. Growth in the Cash App made a smaller 37% contribution to revenue gains, but when you pull out to a two-year view, compound annual growth rates (CAGRs) of 90% were particularly noteworthy.
NYSE: SQ
Key Data Points
Looking ahead, Block has ambitious plans. Closing on its acquisition of buy now, pay later specialist Afterpay in January will allow Square Online users to take advantage of installment payments, which have been shown to boost overall transaction volumes and frequencies. Block has attracted increasingly complex and upmarket businesses to boost its reputation for quality as well as its financial success. Global expansion, the early success of the Cash Card, and economic trends that could remain favorable could all be positive catalysts for the company. Together, they explain why Block's stock is moving so much higher after hours on Thursday.
Etsy looks crafty
Meanwhile, shares of Etsy rose even more sharply, gaining 28% in after-hours trading. The craft goods marketplace couldn't have made investors happier with its Q4 financial results.
Image source: Getty Images.
Etsy's numbers showed sustained growth that satisfied shareholders even after a strong year in 2020. Q4 gross merchandise sales set a record $4.2 billion, up 16.5% year over year, and Etsy's revenue of $717 million was also at an all-time high. Net income climbed 9% to $162 million, working out to $1.11 per share.
More broadly, Etsy succeeded in improving the customer experience on its marketplace platform with the goal of retaining the millions of buyers who first used the service at the beginning of the COVID-19 pandemic. Tools like a gift finder and app-exclusive sales promotions helped drive engagement and retention as well.
Most notably, Etsy boosted its seller transaction fee from 5% to 6.5% effective April 11. That 30% hike could boost revenue dramatically, and although Etsy intends to plow most of that money into internal investment, shareholders seem excited about the potential net impact on the company's growth in the long run.
Both Etsy and Block remain far, far below their best levels. However, rebounds always take a catalyst, and positive earnings could be the first step in a longer recovery for both companies.
