Block, Inc. (NYSE: SQ) is focused on creating ecosystems for distinct customer audiences. The Company operates through two segments: Square and Cash App.

Block, Inc. (NYSE: SQ)

Block, Inc. (NYSE: SQ) is focused on creating ecosystems for distinct customer audiences. The Company operates through two segments: Square and Cash App.

Recommendation Rationale – Sell at USD 67.33

• The company is exposed to the risks related to economic, financial, and tax risks. These include a deterioration of general macroeconomic conditions, foreign exchange rates risks, any greater-than-expected tax liabilities or significant valuation allowances on the company’s deferred tax assets, etc.
• SQ’s business depends on its ability to maintain, protect as well as enhance its brands.
• The substantial and increasingly intense competition in the company’s markets and industry might act as a headwind.
• The company’s share price surpassed its R1 level recommended on August 7, 2024. Therefore, there can be a possible decline from the specified resistance levels.

SQ’s Daily Price Chart

SQ Daily Technical Chart, Data Source: REFINITIV

Fundamental Valuation:

P/E Based Relative Valuation

Considering the risks mentioned, SQ is expected to trade at slight discount. For conducting the valuation, the following peers have been considered: PayPal Holdings Inc (PYPL.OQ), Mastercard Inc  (MA.N), etc.

Given its current trading levels, recent rally in the share price, and risks associated, it is prudent to book profit at the current levels.

Hence, a ‘Sell’ rating has been provided on the stock at the closing price of USD 67.33 per share, up by 2.36% as on 17^th September 2024

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 17 September 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.