Why is the Block share price plunging 11% on Tuesday?

Afterpay-owner, Block, has seen its shares crash lower on Tuesday…

| More on:
a woman looks distressed as she stares dramatically at her phone watching the Megaport share price crashing today

Image source: Getty Images.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Square share price is crashing on Tuesday
  • In early trade, the payments giant is the worst performer on the ASX 200
  • A number of factors appear to be weighing on the Afterpay-owner's shares

The Block Inc (ASX: SQ2) share price is the worst performer on the ASX 200 index on Tuesday morning.

At the time of writing, the payments giant’s shares are down a massive 11% to $119.07.

This means the Block share price is now down a disappointing 39% from its ASX high of $196.00.

Why is the Block share price crashing?

Investors have been selling down the Block share price on Tuesday due to a combination of significant weakness in the tech sector and company-specific factors.

In respect to the former, overnight the tech-focused Nasdaq index continued its poor run and sank 4.3%. Investors were selling stocks amid concerns that rising interest rates will slow economic growth and potentially even cause a recession.

This means the famous index is now down by a disappointing 26.5% since the start of the year.

What else?

In addition to the above, a material pullback in the bitcoin price could also be weighing on the Block share price. At the time of writing, the bitcoin price is down a whopping 12.5% to US$30,229.50.

The Afterpay-owner generates significant revenue from customers using its Cash App to buy and sell the cryptocurrency, so its weakness could be seen as a negative for the company.

Finally, a number of brokers in the United States have suddenly become bearish on Block’s shares, which certainly isn’t helping with investor sentiment.

Overnight, analysts at Barclays, Goldman Sachs, Morgan Stanley, and UBS all hit Block with either rating downgrades or lowered price targets. This was despite the Block share price already trading 41% lower since the start of the year prior to yesterday’s decline.

Former Afterpay shareholders will no doubt be hoping a strong second quarter wins analysts around and gets Block’s shares heading in the right direction again soon.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Technology Shares

digital screen of bar chart representing asx tech shares
Technology Shares

Broker names 3 of the best ASX tech share to buy in FY23

These tech shares could be buys in FY 2023...

Read more »

Technology written in orange in tech sector financial diagram.
Technology Shares

What on earth happened to ASX 200 tech shares in June?

Why did ASX 200 tech shares have such a horrible month over June?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Technology Shares

Why did the Kogan share price sink 22% in June?

Kogan's shares were sold off again in June...

Read more »

Three different hands against a blue backdrop signal thumbs up, indicating share price rise on the ASX market
Technology Shares

Why this top broker just slapped a buy rating on Xero shares

Xero shares could be great value according to Morgans...

Read more »

Three businesspeople leap high with the CBD in the background.
Technology Shares

Why is the PointsBet share price storming 13% higher today?

PointsBet's shares are jumping again on Thursday...

Read more »

a group of three young men sit on a sofa in a home environment with a bowl of popcorn and beer bottls in front of them cheering on one of their group as he looks excitedly at his phone as though he's just had some success on an online gambling app.
Technology Shares

Why is the BetMakers share price charging 7% higher today?

BetMakers shares are having a decent start to the day...

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Technology Shares

Here’s why the Electro Optic Systems share price collapsed 26% today

The defence contractor's shares did not win the battle today.

Read more »

A man yells as his virtual reality headset and earphones tumble to the floor.
Technology Shares

Here’s why ASX 200 tech shares are taking a beating on Wednesday

Global share markets are forecast to remain volatile until inflation is brought under control.

Read more »