Why did the Block share price have such a lousy time in FY22?

Last financial year was a transformative one for the now-ASX 200 tech giant.

| More on:
a young woman sits with her hands holding up her face as she stares unhappily at a laptop computer screen as if she is disappointed with something she is seeing there.

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 Block share price tumbled nearly 49% between the company hitting the ASX in January and the end of FY22. It finished last financial year trading at $90.50 
  • The payments giant listed on the Aussie market after it acquired BNPL giant Afterpay in an all-scrip deal 
  • However, Block has been battered amid a broader tech sell-off in 2022 

Financial year 2022 (FY22) was a busy period for now S&P/ASX 200 Index (ASX: XJO) tech staple, Block Inc (ASX: SQ2) and its share price.

While the payment service provider didn’t reach the Aussie market until January, it was the talk of the town for most of FY22 after announcing its plan to acquire former market darling and ASX buy now, pay later (BNPL) share Afterpay.

But between listing on the ASX and the end of FY22, the Block share price tumbled 48.7% to trade at $90.50.

For context, the ASX 200 slumped around 10% across the entirety of FY22.

Let’s take a closer look at what happened to Block and its share price over the course of last financial year.

What went wrong for the Block share price in FY22?

The Block share price first emerged on the ASX on 20 January, closing its first session at $176.63. Shares in the company hit the market after being issued to those previously invested in Afterpay.

Block proposed to take over the BNPL giant in August 2021, offering 0.375 Block (then Square) shares for each Afterpay stock to do so. The deal was valued at around $39 billion at the time.

However, that value tumbled alongside Block’s US listing, Block Inc (NYSE: SQ)’s share price. It fell around 55% between the acquisition’s proposal and its implementation.

Of course, the company also underwent a name change last financial year. Block was born from Square on 10 December. On announcing the switch, the company said:

The name has many associated meanings for the company — building blocks, neighbourhood blocks and their local businesses, communities coming together at block parties full of music, a blockchain, a section of code, and obstacles to overcome.

Finally, the most recent results released to the ASX from the payments and BNPL giant dropped in May.

Block’s revenue fell 22% to US$3.96 billion in the first quarter. Though, when excluding revenue from Bitcoin (CRYPTO: BTC), it increased by 44%. The company’s gross profit was also up 34% year-on-year, reaching US$1.29 billion.

However, it was likely a broader tech sell-off that damaged the Block share price most.

The S&P/ASX 200 Information Technology Index (ASX: XIJ) had a rough start to 2022 as uncertainty reigned. Then, tech stocks were once again among the hardest hit as inflation and resulting rate hikes kicked off.

The tech sector slipped around 40% over the course of FY22.

Motley Fool contributor Brooke Cooper 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 Bitcoin and 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 BNPL shares

A business woman looks unhappy while she flies a red flag at her laptop.
BNPL shares

Top broker warns that the Zip share price could sink 43%

Are Zip's shares heading lower from here?

Read more »

A corporate executive in a suit and wearing boxing gloves slumps in the corner of the ring representing the battered Zip share price and consideration reportedly being given to dumping the company's UK operations
BNPL shares

Does this signify more bad news for ASX BNPL shares like Zip?

An ASX bank just wrote down its BNPL investment by 85%...

Read more »

A woman holds up hands to compare two things with question marks above her hands.
BNPL shares

‘The environment has changed’: Can Block shares maintain growth AND profitability into 2023?

The ASX 200 BNPL share is scaling back its planned investments over the coming quarters by US$250 million to focus…

Read more »

Happy man doing online shopping.
BNPL shares

Did Zip really outgrow former ASX favourite Afterpay in the June quarter?

Zip appears to be growing in markets where Afterpay has struggled.

Read more »

A young man wearing glasses and a denim shirt sits at his desk and raises his fists and screams with delight as he watches the ResApp share price go 50% higher today
BNPL shares

Why is the Block share price charging 10% higher on Thursday?

What's going on with the digital payments company's shares today?

Read more »

A woman sits on a chair smiling as she shops online.
BNPL shares

Zooming higher: The Zip share price is up 7%

The BNPL sector is lighting the ASX up.

Read more »

a smiling woman sits at her computer at home with a coffee alongside her, as if pleased with her investments.
BNPL shares

Why is the Sezzle share price surging 8% on Wednesday?

The Sezzle share price is on the burn today along with the wider BNPL sector.

Read more »

People sit in rollercoaster seats with expressions of fear, terror and exhilaration as it goes into a steep downward descent representing the Novonix share price in FY22
BNPL shares

Up 10%, what’s going on with the Zip share price today?

It's been a rollercoaster for this ASX BNPL share in recent days, and today is no different.

Read more »