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Key points
- Block's shares have crashed since their listing on the ASX
- The tech selloff has weighed on its shares, as has rumours about Apple's plans
- Apple could be about to disrupt the disruptor with its iPhones
It hasn't been a good start to life on the Australian share market for the Block Inc (ASX: SQ2) share price.
After trading as high as $178.88 shortly after their listing, the payments company's shares have dropped 17% to $149.27.
Why is the Block share price under pressure?
While a good portion of the weakness in the Block share price has been driven by a selloff in the tech sector due to the prospect of interest rates rising sooner than expected, it isn't the only reason for the underperformance.
The company's shares have come under pressure this week amid reports that tech behemoth Apple could be on the verge of competing with Square in the payment terminal market. This is on top of existing speculation that Apple is interested in launching a buy now pay later (BNPL) offering that would compete with the newly acquired Afterpay business.
What's the latest?
According to Bloomberg, Apple is currently developing a new payments service that will allow iPhones to accept debit and credit cards without any further hardware. All this technology requires is an NFC chip, which has been included in iPhones since the iPhone 6. This is made possible thanks to Apple's acquisition of Canada's Mobeewave for approximately US$100 million in 2020.
This means that small business owners would be able to take payments from customers without needing hardware like the Square Reader or the EFTPOS machines from Tyro Payments Ltd (ASX: TYR).
What impact this ultimately has on Block's performance, only time will tell. But judging by the Block share price in recent days, investors appear concerned that it could slow its terminal and gross payment volume growth if Apple starts to win market share.
Though, it is worth remembering that Apple hasn't confirmed this technology nor its BNPL aspirations.
