What happened
Block (SQ +0.40%) had a good day on Monday as its stock price finished the day up 8.6% to $55.92 per share. The fintech had been up as much as 10.2% during the trading day.
It was also a green day for the stock markets as the Dow Jones Industrial Average finished the day up 551 points (1.9%), while the S&P 500 was up 95 points (2.6%), and the Nasdaq ended with a gain of 354 points (3.4%).
So what
Block, a fintech that offers a suite of payment and administrative-services solutions for merchants, as well as the Cash App for buyers, has had more bad days than good this year, as it is down 65% year to date.
But on Monday, it was buoyed by a surging Nasdaq, which was up 3.4%. The main catalyst came from England as a decision to scrap a plan to borrow money for tax cuts sent the value of the British pound soaring roughly 1.4% higher. Unfunded tax cuts proved to be an unpopular fix, particularly when the economy is dealing with deficits, inflation, and a weak pound. Block, like most fintechs, felt the tailwinds from this overseas move.
NYSE: SQ
Key Data Points
Block also made some news on Monday as its Square division launched two new products: Square for Retail and Square Appointments on its Square Terminal. These new services allow its retail clients to ring up customers, conduct returns, check inventory, among other things, anywhere in the store, including at curbside and from the sales floor. Launched in time for the holiday shopping season, it is designed to make life more convenient for its clients and customers by reducing lines and facilitating more sales. Alyssa Henry, head of Square, said:
The holiday season is not only one of the busiest times of year, but also a crucial period for a merchant's bottom line ... By bringing Square for Retail and Square Appointments to Square Terminal just ahead of this critical time, sellers can access powerful integrations between software and hardware that gives them fast, efficient operations to increase sales and meet their customers' needs, anywhere and anytime.
Now what
Block also may have gained momentum from some solid bank earnings thus far. On Monday, Bank of America beat analysts' expectations, buoyed by higher net interest income due to rising rates and solid loan activity, and a jump in fixed income trading.
Meanwhile, several analysts -- most recently Baird -- have lowered Block's price target as they expect slower growth next year due to a more sluggish economic environment.
I like Block's long-term prospects, but the valuation still looks too high, and the economic picture too uncertain to buy right now. The company reports third-quarter earnings on Nov. 3.
