Block (SQ -0.34%) has been one of the most popular -- and volatile -- fintech stocks since the company went public in November 2015. Of course, back then, it was known as Square -- it didn't rebrand to Block until late in 2021.
It started out in 2009 providing its Square card reader, which connected to smartphones to let merchants take point-of-sale card payments anywhere. But it grew into a business that provided a full suite of products for merchants, launched the Cash App for consumers, acquired a bank charter, and got into streaming music, crypto, website development, and buy now, pay later -- among other ventures.
So if you invested $5,000 in Block when it went public, how much would you have today?
A wild ride
Block went public on Nov. 19, 2015, at $9 per share. If you invested $5,000 in the stock at that point, it would have purchased 556 shares. That initial investment has gone on a wild ride since then that has certainly tested investors' nerves. It also shows the risks of buying into a stock when it's hot, and, in Block's case, overpriced.
Block was a steady grower up until 2020, riding revenue gains from both its consumer-oriented Cash App and its products and offerings for merchants. But then the pandemic hit and, after an initial drop, its share price skyrocketed as tech stocks, particularly fintechs, took off. In the COVID world of lockdowns, store closures, and social distancing, demand for digital touchless payments and transactions soared -- thus buoying Block.
But it wasn't just fintechs -- the whole technology sector boomed as people staying largely at home became even more reliant on technology to work, live, learn, and be entertained.
The Nasdaq Composite index, considered a key barometer for the tech sector, went from opening at 6,847 on March 23, 2020 -- the low point of its early pandemic crash -- to closing on Nov. 19, 2021 at a peak of 16,057. In a little more than a year and a half, the index gained 135%.
Block's return was even more striking as it went from closing at about $39 per share on March 20, 2020, to closing at over $281 per share on Aug. 5, 2021. That comes out to roughly a 620% gain over a stretch of less than 18 months.
By Nov. 19, however, Block shares were down to about $225 per share, and at the end of 2021, the stock was trading at around $165 per share. And it kept dropping.
Riding out the volatility
As we are all well aware, 2022 was not a great year for stocks, and tech stocks in particular. The market had become overpriced due to the feeding frenzy that had taken place in 2020 and 2021, and stocks like Block fell hard. Block declined 61% in 2022 and ended the year at about $62 per share.
So far this year, it has posted modest gains, rising by about 17% to around $74 per share as of Feb. 23.
The trajectory of Block's stock chart tells a couple of different stories, depending on what type of investor you are. If you hopped on board as it was rocketing higher in 2020 or 2021, you might be disappointed -- your investment might be down 50% or more since then. But if you invested in this company early and took a long-term view, you probably aren't disappointed at all.
After all, if you bought it at $9 per share in 2015, Block has given you an average annual return of 26.5% since then. That's better than the Nasdaq or the S&P 500 over the same period.
And those 556 shares you bought at the IPO for $5,000 would now be worth more than $40,000. That's not a bad investment at all, and you're just getting started with a stock that many believe has a bright future.
