Four ASX shares that are falling more than most today are listed below. Here's why they are dropping:

Alliance Aviation Services Ltd (ASX: AQZ)

The Alliance Aviation Services share price is down 39% to $1.55. This follows the release of a trading update after the reinstatement of its shares following a week-long suspension. Alliance revealed that it expects to report a profit before tax of $46 million to $50 million for FY 2026. It also expects its sizeable net debt to reduce to $392 million over the year.

Block Inc (NYSE: XYZ)

The Block Inc share price is down 14% to $97.17. Investors have been selling the payments company's shares following the release of its quarterly update. For the third quarter, Block posted a 2% lift in revenue and an 18% increase in gross profit to US$2.66 billion. The former was short of consensus estimates.

DroneShield Ltd (ASX: DRO)

The DroneShield share price is down a further 4% to $3.26. This counter drone technology company's shares have fallen heavily this week after it announced that almost 44.5 million performance options were vested. This happened after DroneShield achieved its performance hurdle of $200 million cash receipts in a 12-month rolling period. DroneShield's CEO, Oleg Vornik, commented: "Performance Options align the DroneShield team and its investors, enabling DroneShield to attract the best talent and incentivise performance, whilst reducing the cash burden on the Company as it continues to rapidly grow."

Macquarie Group Ltd (ASX: MQG)

The Macquarie share price is down almost 7% to $202.55. Investors have been selling this investment bank's shares after its half year results fell short of expectations. For the six months ended 30 September, Macquarie posted a net profit of $1,655 million. While this was up 3% on the prior corresponding period, it was down a sizeable 21% on the second half of FY 2025. In addition, it fell short of Citi's forecast for a net profit after tax of $1,877 million. Macquarie's managing director and CEO, Shemara Wikramanayake, said: "The improved underlying performance across our operating groups in the first half reflects the ongoing benefits of our diverse business mix and our continued investment in opportunities that support long-term growth and deliver positive outcomes for our clients and communities."

The post Why Alliance, Block, DroneShield, and Macquarie shares are tumbling today appeared first on The Motley Fool Australia.

But did you know he actually sits on the board and owns shares in an S&P/ASX 200 Index (ASX: XJO) company?

If you own shares in fintech Block Inc CDI (ASX: SQ2), you are buying into a company that has Jay-Z as a director and investor.

In fact, just last month he added more Block shares to his portfolio.

The rapper, whose real name is Shawn Carter, disclosed that he was issued a total of 41,759 shares in early October. The stocks came to him under his own name, an "immediate family member", and through his holding companies.

Based on the share price on Wednesday morning, that's worth about $3.2 million.

So how did this come about?

How did Jay-Z join the Block board?

The short answer to Carter's involvement is that Block Inc acquired Carter's Tidal music streaming service in 2021.

The long answer is that Block Inc co-founder and chief Jack Dorsey spent the summer of 2020 in the Hamptons hanging out with Carter.

A friendship developed, and Dorsey came up with the idea of buying out Tidal, which was financially struggling at the time.

As part of the acquisition, Jay-Z joined the board of Block Inc.

Block Inc was later unsuccessfully sued by some of its own shareholders for the deal, who accused Dorsey of using company funds to shore up his friendship with a celebrity.

The Delaware judge actually agreed with this, but ultimately dismissed the lawsuit.

"It is reasonably conceivable that Dorsey used corporate coffers to bolster his relationship with Carter," Judge Kathaleen McCormick wrote in her ruling.

"Plaintiff has alleged sufficient facts to make a reasonable person question the business wisdom of the Tidal acquisition, but plaintiff has failed to plead that the committee defendants acted in bad faith and thus faced a substantial likelihood of liability for that decision."

No doubt those investors may have been less angry if the performance of Block shares were better.

The Block share price has tumbled almost 80% since the Tidal deal closed in April 2021.

The stock joined the ASX in January 2022 after acquiring the Australian buy now, pay later business Afterpay.

The post Guess which ASX 200 shares Jay-Z just added to his portfolio appeared first on The Motley Fool Australia.

"This morning I paid $7.60 for a large coffee," she said.

"What's behind the crazy price for a cup of takeaway coffee?"

Surely inflation can't be that bad, can it?

She broke down the ingredients and tracked the global prices for each commodity.

"Coffee bean prices have fallen 18%. Average milk prices have fallen 10% to 23%. Oil prices — think transport — have fallen 1.4%.

"The Australian wage cost index is up 39%. Australian rent is up 390% annually — all in two years."

There's no obvious answer. Wages and real estate are up but the coffee components are actually cheaper than they used to be.

Then a thought hit her like lightning.

"The real winner when you splurge on your takeaway coffee? The payment terminal, Square."

What is Square and who makes it?

Square is a payment terminal that allows customers to pay using credit and debit cards at a retailer.

The US maker of the devices is dual-listed on the NYSE and the ASX — Block Inc CDI (ASX: SQ2).

Amir points out the share price has had a shocker in recent times.

"Over the last two years, its share price has fallen 79%," she said.

"Also note — stay with me here — that Square makes 40% of its money from Bitcoin (CRYPTO: BTC). And the Bitcoin price has fallen by 44% in two years."

So considering the payment terminal's ubiquity and its ability to take a commission from each $7.60 cup of coffee we buy, are Block shares the bargain of the century?

Are Block shares worth buying right now?

According to Amir, the latest financials were bullish.

"Block had a positive third-quarter earnings report showing higher net revenue growth, higher earnings per share, earnings (EBITDA) and higher transaction-based revenue.

"Block also upgraded its guidance and expects long-term growth ahead."

Therefore, Amir would buy Block shares to offset the exorbitant cost of her morning caffeine hit.

"Now might just be the best time to buy into the dip before it skyrockets," she said.

"Consensus price target is US$72.79 ($112.71) with 71% of [Wall] Street analysts holding the stock as a buy."

Block shares closed Tuesday at $76.89 apiece.

The post $7.60 for a cup of coffee? The ASX stock cashing in on this craziness appeared first on The Motley Fool Australia.

Block shares are on fire this Tuesday. The US-based fintech company formerly known as Square is currently up a whopping 6.4% at $115.48 a share at the time of writing, well above the return of the broader market.

So what's going on here?

Why is the Block share price on fire?

Well, Block isn't your normal ASX share. Its ASX listing is actually a CHESS Depositary Interest (CDI), which means the ASX shares represent ownership of another, foreign-listed investment. In Block's case, it is the original shares of Block Inc (NYSE: SQ) that are listed on the US markets.

This arrangement came out of Block's decision to acquire the old ASX-listed buy now, pay later (BNPL) pioneer Afterpay. Afterpay used to be an ASX share (as many of us would remember). But its ASX listing was replaced by Block when the American giant bought Afterpay back in early 2022.

So this situation probably gives us the best indication of why Block shares are on a tear today. Last night (our time), Block's US-listed shares rocketed 7.22% to US$81.66. As such, Block's ASX listing was always going to have a cracking day today.

Most US tech shares had a stellar session across the Pacific last night.

Tesla Inc (NASDAQ: TSLA) shares were up 7.74%, while Shopify Inc (NYSE: SHOP) and Netflix Inc (NASDAQ: NFLX) were up 8.8% and 4.9%, respectively. It seems Block shares have just been caught up in this stampede to tech.

It's not too different on the ASX today. Some ASX tech shares had very strong mornings, although many have slumped around lunchtime. Xero Limited (ASX: XRO) shares were up around 3% at one point, as was Appen Ltd (ASX: APX). Cettire Ltd (ASX: CTT) is a standout performer this Tuesday, up by almost 10% at the time of writing.

The post Why is the Block share price surging 6% on Tuesday? appeared first on The Motley Fool Australia.

The fund consists of "a high-conviction portfolio of quality global listed equities from a research driven, bottom-up investment philosophy". It's looking for companies that have predictable earnings, low debt, sustainable competitive advantages, organic growth options and experienced and proven management teams. 

The September 2022 monthly update shows the fund has declined 31.8% over the past 12 months. The biggest detractors to performance were some of the largest and most popular global tech stocks.

Even for those of us who are somewhat numb to just how far these fallen heroes have tumbled, when the numbers are laid bare, you see just how brutal this market has been for a number of large-cap tech stocks.

Block (NYSE: SQ) – down 74%

Roku (NASDAQ: ROKU) – down 80%

Spotify (NYSE: SPOT) – down 57%

Meta Platforms (NASDAQ: META) – down 55%

How the mighty have fallen. 

Yet Hyperion are sticking to their guns, confident in what they believe will be a low-growth inflationary environment, that such an environment is best for their investing style.

Hyperion says that while short-term performance has been unpredictable, and acknowledging it has been a difficult period for investors, the fund believes it has allocated capital to businesses that will produce superior long-term results. 

The top five holdings at the end of September were all large-cap US tech stocks, namely Tesla (NASDAQ: TSLA), Amazon (NASDAQ: AMZN), Microsoft (NASDAQ: MSFT), ServiceNow (NYSE: NOW) and Airbnb (NASDAQ: ABNB). Combined, they made up over half the Hyperion Global Growth Companies Fund portfolio.

Hyperion went on to say its "global portfolio continues to produce strong short-term financial results which are consistent with the assumptions that underpin our long-term valuations," saying it believes its portfolio "should perform relatively well in an economic downturn".

The Hyperion Global Growth Companies Fund share price has fallen 31.7% over the past 12 months, in line with the underlying performance of the fund.

The post Tough year for leading global growth fund laid bare with brutal fall in tech stocks appeared first on The Motley Fool Australia.

The name change of Square to Block (NYSE: SQ) dramatically changed the narrative for the company. Once viewed as a pure fintech stock, it has pivoted to music streaming with Tidal and built a cryptocurrency ecosystem that makes it seem more like a conglomerate.

Consequently, Block's performance has become more closely aligned with that of Bitcoin (CRYPTO: BTC), reinforcing perceptions that it is a different enterprise. Nonetheless, a closer look at the company indicates that Block remains primarily Square and Cash App, and, at least for now, investors have little reason to consider its other ventures while evaluating the stock.

Block stock: Perception vs. reality

The state of Block stock has changed dramatically in a year. Last September, Block (still known as Square at the time) sold for more than $250 per share. Moreover, Jack Dorsey managed both Block and Twitter, Inc.(NYSE: TWTR), and Bitcoin was in a bull market.

Beginning in late November, Dorsey devoted himself to the company full-time, leading to the name change and emphasis on its Bitcoin-based segments, Bitcoin advancement company Spiral and Web platform TBD. Dorsey even predicted that Bitcoin would replace sovereign currencies.

Both Block and Bitcoin subsequently lost most of their value. Admittedly, most tech stocks have fallen, so one cannot blame Block's decline on Dorsey's prognostications. Still, the company's fortunes seem tied to Bitcoin. Since Dorsey became the full-time "Block Head," Block stock declined 65%, while Bitcoin is off 62%.

Unfortunately for Block shareholders, the stock may have fallen victim to a false perception. Technically, Bitcoin made up $3.5 billion of Block's $8.4 billion in revenue in the first half of 2022. However, since the company transacts the cryptocurrency, most of that "revenue" would count as payment volume if the accounting rules differed. After subtracting Bitcoin costs, real Bitcoin revenue amounts to only about $85 million in the first six months of the year, about 3% of gross profits.

The Square and Cash App ecosystems

Thus, instead of worrying about Bitcoin, Block investors should judge the company based on the Square and Cash App ecosystems, which still account for nearly all of the company's revenue. Cash App is a social payments platform that accommodates users' spending, deposits, and investing. Cash App also led the way in Bitcoin trading on its platform when it began trading the cryptocurrency in 2018. With this functionality, it boasts 47 million monthly active users and has beaten PayPal's Venmo for number of downloads on Apple Inc. (NASDAQ: AAPL)'s iPhone, according to MobileAction.

The Square segment also built a successful niche with businesses. The platform can accommodate nearly all of a business's financial needs. This includes transactions, payroll, inventory, point-of-sale, and loans. In the U.S., where it opened an industrial bank, Square can also manage a company's checking and savings accounts.

Additionally, it is moving across the developed world and currently operates in eight countries. Since three of the countries are in the EU, that foothold could mean a relatively easy move into the 24 EU countries it does not yet serve. Also, only $146 million of its gross profit for the first two quarters (around 5%) came from outside the U.S., meaning its non-U.S. markets hold significant potential for growth.

The state of Block stock

Overall, Block reported about $2.8 billion in gross profit in the first two quarters of 2022, growing 31% year over year. Still, operating expenses increased by 68% during that time, leading to a loss for the first half of the year of $417 million. Block earned $243 million in the same period one year ago.

Block's investments in its business may ease concerns about returning to losses. This is crucial, as investors have shown less leeway for money-losing companies in this bear market.

Another consideration is an expensive valuation, as its price-to-free-cash-flow ratio of 70 makes it considerably pricier than PayPal Holdings, Inc.(NASDAQ: PYPL) at 22 times free cash flow. Nonetheless, the aforementioned 31% gross profit growth for the first half of 2022 could help make Block a buy in this bear market due to its still rapid growth.

Admittedly, Bitcoin, Tidal, and other parts of Block may become a more consequential share of gross profits over time. However, considering the bright future of the Square ecosystem and Cash App, Block stock could make a massive comeback with or without its newer segments.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why you should buy Block stock (and it's not Bitcoin) appeared first on The Motley Fool Australia.

Do you remember the heady days of 2021, when Bitcoin (CRYPTO: BTC) surged past $60,000, and the entire crypto market was hitting new heights? There were plenty of people saying that they wish they had bought Bitcoin when it was $20,000 or that they wish they had bought Ethereum (CRYPTO: ETH) below $2,000. After 2022's sell-off, patient, risk-tolerant long-term investors can do just that as prices have returned to these levels. Here are three cryptos that I would regret not buying during the dip. 

1. Bitcoin

Bitcoin has shown some signs of life as of late, rallying 33% off the 52-week low of $17,664 that it hit in June. Bitcoin is still a long way off from its all-time high of over $68,000 last November, and I like the fact that investors don't have to try to "catch a falling knife" now that the largest digital asset by market cap has stabilized and looks like it is building momentum again.

As the original cryptocurrency and the largest digital asset with a market cap of nearly $450 billion, Bitcoin is a blue chip cryptocurrency that I would buy during this pullback. When the stock market is down, it is a great time to start or add to discounted positions in top global companies, and the crypto market is no different -- during this downturn, investors can accumulate a position in Bitcoin at a discounted price rather than gambling on smaller altcoins with questionable utility that are down 95% from all-time highs they are unlikely to ever approach again. 

Bitcoin's Lightning Network has made using and transacting in Bitcoin easier and more accessible than ever before. Companies like Block (NYSE: SQ) are leveraging Lightning to allow their customers to be paid in Bitcoin and to round up credit and debit card purchases for Cash Card users. These services are making Bitcoin more widely available to the general public than ever before and can help it reach even further adoption. 

I like the idea of all investors holding at least a small amount of Bitcoin in their portfolios. The hard cap of 21 million Bitcoin that will ever exist stands in stark contrast to the inflationary nature of all other global currencies. Bitcoin is a worldwide network that anyone on the planet with an internet connection can participate in, so it remains an attractive asset to individuals in countries that have seen their currency suffer from serious inflation over the years, such as Turkey and Venezuela. The increasing ease of using Bitcoin and its global appeal as a decentralized asset with a capped supply make it an attractive investment to allocate at least some investment toward, especially during the current market weakness.

2. Ethereum 

Ethereum has rallied over 100% from its cycle low in June, but the second-largest cryptocurrency is still down 60% from its all-time high. Ethereum is also benefiting from a major upcoming catalyst in The Merge, its long-awaited switch from the proof-of-work consensus to proof of stake. After completing a successful trial run on its Goerli testnet, The Merge is now expected to take place between Sept. 15th and Sept. 16th. The transition will make Ethereum less energy-intensive and thus more climate-friendly. It will also make Ethereum more decentralized, which proponents say will make it more secure. Furthermore, Ethereum will no longer be an inflationary asset and will instead become deflationary in nature, which will make it more scarce over time and should add to its value as demand increases. Some observers also point out that Ethereum will become more scalable as sharding is implemented. Lastly, more users will be able to earn staking rewards by participating in the Ethereum network. With this array of improvements in the wake of a major catalyst, Ethereum is another blue chip cryptocurrency that I have been adding to on the dip. 

3. Solana 

With a market cap of $15 billion, Solana (CRYPTO: SOL) is much smaller (and much newer) than Bitcoin and Ethereum but is also worthy of a position during the current downturn for investors who are looking to diversify and are comfortable moving a bit further down the risk curve. Solana is down 84% from its all-time high but is starting to catch some momentum as well, with a 56% increase since hitting its cycle low in June. 

Solana is establishing itself as a smaller but viable competitor to Ethereum in the world of non-fungible tokens (NFTs), with leading Solana marketplace Magic Eden recently achieving unicorn status with a valuation of over $1 billion in a private funding round. OpenSea, which is viewed as the bellwether for the NFT market, recently opened up its platform to Solana NFTs after previously exclusively featuring Ethereum and Polygon (CRYPTO: MATIC) NFTs. Solana is now the second-largest protocol for NFTs as measured by secondary sales, trailing only Ethereum. Solana is home to a talented team of developers, and its uses are not limited to just NFTs or DeFi applications like many other cryptos -- Solana developers are even working on a phone that will make it easier to interact with decentralized applications when using a mobile device. This phone is scheduled to launch in early 2023 with a price point of $1,000. While this may seem a tad esoteric to some observers, I'm loath to count Solana out because co-founder Anatoly Yakovenko and other key figures from Solana all have prior experience at Qualcomm (NASDAQ: QCOM), which creates semiconductors for the mobile phone industry.

The crypto bear market has created the opportunity to start or add to positions in the top two assets that drive the entire industry, Bitcoin and Ethereum, as well as emerging challengers like Solana, at steep discounts to where they traded just a few months ago. For risk-tolerant investors, this could be the right time to allocate a percentage of their portfolios toward cryptocurrency with some smart buys. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 cryptos I would regret not buying on the dip appeared first on The Motley Fool Australia.

Block shares are on fire today. This ASX 200 tech share is currently up a pleasing 8.89% at $126.93 share.

So, what's going on with Block, the US fintech company that is the owner of Afterpay?

Well, let's get one thing straight. This share price boost doesn't seem to have anything to do with the company itself. Block, which was formerly known as Square, has not released any significant ASX announcements today. Or indeed since the company dropped its quarterly report back on 5 August.

But we are seeing similar moves among many other ASX 200 tech shares this Thursday.

Life360 Inc (ASX: 360) shares have risen more than 9% so far today. Zip Co Ltd (ASX: ZIP) is up more than 5%, as is REA Group Limited (ASX: REA).

Why is the Block share price on fire today?

It's more likely that Block's stellar performance today comes down to the performance of its US-listed sister stock. See, Block's ASX listing is actually a CDI (CHESS Depositary Interest).

This means it is essentially a vehicle that really represents an investment in an underlying company. In this case, that underlying company is Block's primary US listing of Block Inc (NYSE: SQ).

One SQ2 share on the ASX is essentially one SQ share on the US markets, just priced in Australian dollars. Hence, these two investments usually trade in tandem, taking into account currency fluctuations, of course.

So, in last night's trading, Block's US-listed shares rose an impressive 9.54% to US$88.84 each.

Thus, it's no coincidence that the ASX-listed Block shares are rising by a similar amount on our markets today. This is probably why we are seeing such a strong move with Block.

Even so, Block shares remain down more than 28% since they first listed on the ASX back in January.

At the current Block share price, this ASX 200 tech share has a market capitalisation of $64.41 billion.

The post Why has the Block share price exploded 9% on the ASX today? appeared first on The Motley Fool Australia.

Recession fears have weighed heavily on the stock market through the first half of the year. In fact, the broad S&P 500 had its worst first half since 1970, and the Nasdaq Composite is currently 25% off its high, putting the tech-heavy index in bear market territory.

On the bright side, tumbling prices mean that many stocks are now trading at discounts to their historical valuations, and that creates an opportunity for patient investors. Here are two growth stocks worth buying right now.

1. Roku

Roku (NASDAQ: ROKU) helped pioneer the streaming industry. In 2008, it brought the first streaming player to market, not long after Netflix introduced the first streaming service. Today, RokuOS is still the only operating system purpose-built for television, and its viewer-friendly reputation has led to partnerships with a growing number of television manufacturers. That has helped Roku position itself as the most popular streaming platform in the US, Canada, and Mexico.

Meanwhile, Roku has also built a powerful ad tech platform, OneView, which enables advertisers to deliver targeted campaigns across connected TV (CTV), mobile, and desktop devices. That means Roku can monetize advertising whether or not it owns the inventory.

In the first quarter, Roku reported a 14% increase in streaming hours, marking a deceleration in engagement. But that came on the back of a pandemic-driven acceleration in the prior year, when viewing time soared 49%. More importantly, Roku still outpaced the industry average of 10% growth, meaning it gained market share. That led to reasonably strong financial results, as revenue rose 44% to $2.9 billion and cash from operations climbed 18% to $234 million.

Turning to the future, investors have good reason to be bullish. US viewers currently spend 46% of their television time on streaming, but advertisers spend just 18% of their television budgets on streaming. In the coming years, investors should expect more ad dollars to shift to streaming platforms, and Roku is well-positioned to benefit from that trend.

On that note, global television ad spend will reach $344 billion by 2026, according to IMARC Group, and Roku CEO Anthony Wood believes all television advertising will eventually be streamed. That creates a tremendous opportunity for the company.

Shares currently trade at 4.7 times sales, much cheaper than the three-year average of 15.5 times sales. That's why this growth stock is a screaming buy.

2. Block

Block (NYSE: SQ) breaks its business into two segments: Square and Cash App. Through the Square ecosystem, sellers can provision all of the hardware, software, and services they need to run a business across online and offline locations. That differentiates Block from traditional merchant acquirers (e.g. banks), which often bundle products from different vendors, leaving merchants with a patchwork of solutions that must be manually integrated.

The Cash App ecosystem takes a similarly disruptive approach. Consumers can deposit, send, spend, and invest money from a single mobile app, and they can file their taxes for free. Better yet, where banks with physical branches typically pay at least $300 to acquire a new customer, Block pays just $10 to acquire a new Cash App user, making its business model much more efficient.

In short, Block is disrupting the financial services industry for both merchants and consumers, and that has translated into strong financial results. In the past year, gross profit climbed 50% to $4.8 billion and the company generated $965 million in free cash flow, up from a loss of $344 million in the prior year.

Looking ahead, Block is well-positioned to grow its business. The company is working to unlock synergies between Square and Cash App by integrating Afterpay -- its recently acquired "buy now, pay later" (BNPL) platform -- into both ecosystems.

Specifically, Square sellers will be able to accept BNPL online and in person. That should drive sales growth, simply because BNPL tends to boost transaction volume. But those sellers will also be able to use shopper data to deliver targeted recommendations to consumers through the Cash App, which could further boost sales.

Currently, Block puts its addressable market in the U.S. at $190 billion in gross profit, but the company also operates in Canada, Japan, Australia, and the U.K., and it recently entered Ireland, Spain, and France. That means Block has a long runway for growth, and with shares trading at 2.3 times sales -- near the cheapest valuation in the past five years -- now is a great time to buy this growth stock.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Nasdaq bear market: 2 stellar growth stocks I'd buy hand over fist appeared first on The Motley Fool Australia.

What happened

Shares of fintech company Block (NYSE: SQ) -- formerly known as Square -- tanked by 61.9% during the first half of 2022, according to data from S&P Global Market Intelligence. That was a far worse performance than the S&P 500 and Nasdaq Composite indexes, which fell by 21% and 31%, respectively, from their all-time highs. 

So what

There were many reasons for Block's steep drop. The biggest factor was rising interest rates. In an attempt to get inflation under control, the Federal Reserve in March began lifting its benchmark federal funds rate from the near-zero it had cut it to at the start of the pandemic to an upward limit of 2% as of June. More rate hikes are expected following the next two Fed meetings in July and September. The federal funds rate is still at a historically low level, but the speed and magnitude of the rate changes have dragged down Block and other high-growth but richly valued stocks. There is an inverse relationship between interest rates and the present value of risk assets like stocks. Thus, rising rates generally lead to lower stock prices.

Data by YCharts

Some investors were also skeptical of Block's bets on the Bitcoin (CRYPTO: BTC) blockchain network -- the reason for the corporate rebrand from "Square" to "Block." It will take years for these efforts to pay off, if they do at all, since there are other competing crypto networks also vying for developer attention. Block also made a big acquisition, picking up "buy now, pay later" outfit Afterpay in an all-stock deal.

And, of course, there are the growing worries that the U.S. may be headed for a recession. The economy has multiple headwinds working against it this year, and some economists think a recession is already underway. If the consumer takes a hit, Block's growth momentum could be negatively impacted. 

Now what

The good news is that despite all of these issues, Block is still in fast expansion mode as individuals and small businesses rapidly adopt its digital finance platform. Gross profit (revenue minus the cost of revenue) was $1.29 billion in Q1 2022, a 34% year-over-year increase. Profitability, as measured by free cash flow, also rose to $188 million.

After its epic share price decline in the first half of 2022, Block trades for 34 times trailing-12-month free cash flow. That's still a premium price tag, but if the fintech leader can continue its growth streak over the next few years, it could be a worthwhile value for investors who buy and hold. Just remember to make Block part of a well-diversified portfolio if you do choose to invest in it. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Block stock cratered by nearly 62% in 2022's first half appeared first on The Motley Fool Australia.

The S&P/ASX All Technology Index (ASX: XTX) is down 1.2% while the S&P/ASX 200 Info Tech Index (ASX: XIJ) is falling 0.8%.

Let's take a look at what could be impacting ASX tech shares.

Why are tech shares in the red?

The Megaport Ltd (ASX: MP1) share price is diving 6% today while the Appen Ltd (ASX: APX) share price has plummeted nearly 7%.

Block Inc (ASX: SQ2) shares have fallen 3.96% while WiseTech Global Ltd (ASX: WTC) shares are 1.46% down.

Life360 Inc (ASX: 360) shares have descended 6.8%, TechnologyOne (ASX: TNE) shares are down 2.04%, and Xero Limited (ASX: XRO) shares are falling 1.55%.

ASX tech shares appear to be declining following a tough night on the NASDAQ in the United States.

NASDAQ-100 Technology Sector Index (NASDAQ: NDXT) fell 1.16% in the US overnight.

Amazon.com, Inc. (NASDAQ: AMZN) shares descended nearly 3% while Microsoft Corporation (NASDAQ: MSFT) slid 1.05%. Block's US listing (NYSE: SQ) also tumbled 2.21% overnight.

Commenting on this movement, CFRA Research chief investment strategist Sam Stovell was quoted by Reuters as saying:

The reason for lack of direction this week and next week is investors are looking for what's going to happen in the second quarter reporting period.

The post Why are ASX tech shares struggling today? appeared first on The Motley Fool Australia.

But the Block Inc (ASX: SQ2) share price is doing even better. Block shares are currently enjoying a healthy 4.14% bump to $88.29 each so far this Thursday.

This move must come with much relief for Block investors, who have had to watch the company slide a depressing 30% over the past month (even after the 8%-plus gains of the past week).

But Block (formerly known as Square) is still down by around half its value over 2022 thus far. So it's certainly been a trying time for the company's shareholders. Many of whom would still hold Block shares after the company took over the buy now, pay later (BNPL) pioneer Afterpay earlier this year.

Although Block is listed on the ASX, it is actually a US-based company, whose primary listing is Block Inc (NYSE: SQ) on the New York Stock Exchange.

SQ and SQ2 shares are essentially congruent in value though (factoring in exchange rates), so the company's US stock has had a similar journey to Block's ASX shares over this year.

Block shares have got a brand new buyer

We've recently got some news that a large buyer is swooping on Block following its steep falls over 2022.

As covered by our Fool colleagues over in the US, we've just found out that ARK Invest's Cathie Wood has bought another US$5 million of Block shares.

Cathie Wood runs one of the most popular exchange-traded funds (ETFs) on the US markets – the ARK Innovation ETF (NYSE: ARKK).

This ARKK ETF has a reputation as the preeminent growth-based ETF on the US markets. It typically invests in companies like Tesla Inc (NASDAQ: TSLA), Shopify Inc (NYSE: SHOP) and Zoom Video Communications Inc (NASDAQ: ZM). 

ARKK has taken a fairly big hit over 2022, but ARKK was a top performer over 2020 and 2021.

According to our colleagues across the Pacific, ARK bought nearly 355,000 Block shares over May. It stopped buying when the company topped US$80 a share. But ARK has resumed buying this week, with another 82,000 shares (US$5 million worth) acquired on Tuesday alone.

Block's US stock has been trading around US$60 for most of this week. So clearly Cathie Wood is seeing some value in the Block share price right now.

But only time will tell if Block's current price proves to be a low point for the company going forward.

At the current Block share price, this US tech company has a market capitalisation of US$35.21 billion.

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For perspective, the S&P/ASX 200 Index (ASX: XJO) is 0.36% in the green at the time of writing.

Let's take a look at what could be impacting the Block share price today.

US listing slides

Block shares may be down, but it is not the only buy now, pay later (BNPL) ASX share to slide today. The Openpay Group Ltd (ASX: OPY) share price is down 6.35%, Sezzle Inc (ASX: SZL) shares have dropped 2.17%, and the Zip Co Ltd (ASX: ZIP) share price is descending 0.53%. Meanwhile, Beforepay Group Ltd (ASX: B4P) shares are climbing 1.27%. The S&P/ASX All Technology Index (ASX: XTX) is falling 1.2% today.

Block's ASX share price appears to be following in the footsteps of the company's US listing. Block Inc (NYSE: SQ) fell 5.29% on the New York Stock Exchange on Monday.

Daiwa Securities cut the price target on Block's US listing to $100 from $170. This is still 25% more than the current share price of $79.70. Further, Daiwa relegated the share from a "strong buy" to "buy".

Block recently reported a 22% fall in revenue to US$3.96 billion. However, gross profit jumped 34% year on year to US$1.29 billion. The company also reported a positive start to the second quarter of this year.

Block listed on the ASX for the first time in February after acquiring Afterpay.

Block share price snapshot

The Block share price has descended 35% on the ASX since it listed, while it is down 32% in the past month alone. In the last week, Block shares have slumped by 14%.

For perspective, the benchmark ASX 200 index has dropped nearly 5% in the year to date.

Block has a market capitalisation of about $5 billion based on the current share price.

The post Why is the Block share price sliding today? appeared first on The Motley Fool Australia.

At the time of writing, the ASX 200 is up a healthy 1.77% at just over 7,060 points. But the Block Inc (ASX: SQ2) share price is shooting even higher.

Block shares are currently up a whopping 14.37% at $114.26 each after closing at just $99.90 yesterday. The shares went as high as $114.58 earlier in today's session, which was a rise of close to 15%.

So what's behind Block's dramatic shift upwards today? Well, to place things in context, Block's rise comes after the company was one of the worst-performing ASX shares on the share market yesterday.

While the ASX 200 ended up shedding 1.75% during Thursday's trading, Block shares lost a whopping 17.6%. This came after Block's US iteration fell by a similar amount on Wednesday night (our time) following some weakness across its sector. Last night saw Block's US listing shoot 6.37% higher to US$75.76 a share.

So right off the bat, we can probably say that today's moves are an elastic band-like bounceback from such a dramatic loss yesterday.

Block share price shoots the moon

But there's another factor we can also consider. As reported by National Australia Bank Ltd (ASX: NAB)'s NABtrade, analysts at Wolfe Research have just come out and called the recent sell-off in Block shares "unwarranted".

Wolfe Research says that the slide in the US-listed Block shares (which applies by extension to the ASX's SQ2 shares) "can be attributed to bearish read-throughs from companies that reported earnings in the buy-now-pay-later (BNPL), lending and crypto spaces".

Here's some more of what Wolfe said:

We believe some have been interpreting the results/commentary from AI lending platform Upstart Holdings Inc as a negative for SQ given the perception that BNPL users are higher risk borrowers and the thought of not being able to sell loans to investors… Shares of some BNPL players and consumer lending firms came under pressure this week after UPST lowered its annual forecast…

In addition to the impact from UPST, Wolfe Research says investors may have been influenced by cryptocurrency exchange Coinbase Global Inc's forecast of a sequential drop in trading volumes in Q2…

As bitcoin accounts for about 24% of trading volume and 42% of assets on COIN's platform, analysts believe SQ investors may have been reading through to potential further declines in SQ's bitcoin revenue and gross profit… [Wolfe] believes pressure on share driven by these headlines are overblown and investors have the opportunity to be tactical around SQ.

So it's possible that some investors agree. Whatever the true reason for Block's eye-watering rises today, no doubt investors will be very pleased with what they see.

At the current Block share price, this ASX 200 share has a market capitalisation of US$43.98 billion.

The post Block share price rebounds 15% as analyst calls sell-off overblown appeared first on The Motley Fool Australia.

Block shares are getting a hammering today. The US-based fintech company and new owner of Afterpay is down by a nasty 15.63% at $102.30 a share as it currently stands. That puts Block very close to its 52-week low of $102 a share. It also means the company has fallen close to 30% over just the past five trading days. Not to mention more than 37% over the past month.

So what's going on with Block today that has elicited such a sharp selloff?

Why are Block shares getting smashed today?

Well, it's not entirely clear. There hasn't actually been any news or developments out of Block itself that might explain this tanking share price. However, there are still several factors that we can look to. The first is the Block Inc (NYSE: SQ) stock price, the original US listing of Block.

SQ2 shares are simply an ASX-listed version of Block's American SQ shares. They are more or less the same investment, just priced on a different stock exchange. But last night (our time), Block's US shares were also smashed. The company dropped 15.61% in last night's trading down to US$71.22 a share.

This seems to have been sparked by both the ongoing sell-off in the US tech shares sector and a sharp plunge in the price of Bitcoin (CRYPTO: BTC). Block famously has a large stockpile of Bitcoin. But unfortunately for the company, this would have dropped a hefty 7.5% or so over the past 24 hours thanks to the price of Bitcoin itself dropping by that number.

But Block wasn't the only US tech company copping a pounding last night, although it was one of the larger fallers. We had Tesla Inc (NASDAQ: TSLA) drop more than 8%, and Apple Inc (NASDAQ: AAPL) fall by more than 5%.

Meanwhile, the S&P/ASX All Technology Index (ASX: XTX) is also taking a beating, down 5.41% at the time of writing.

It sure is a tough time to be a tech share.

At the current Block share price, this ASX 200 fintech share has a market capitalisation of US$41.34 billion.

The post Blockdown! Why is the Block share price crashing by 16% today? appeared first on The Motley Fool Australia.

What happened

Shares of fintech stock Block (NYSE: SQ) fell 26.6% last month due to the sell-off in growth stocks and cryptocurrencies. There wasn't any major negative news about Block's operations, but the stock suffered along with other correlated asset classes as investors pull capital out of risk assets.

So what

Block beat analyst estimates for the first quarter, and it reported those results in the first week of May. Investors are also looking forward to updates from the fintech disruptor later this month. Those events provide valuable insight on the financial prospects of Block's business. No such information was available in April. The biggest development was the company's announcement that it was launching a business lending product.

Instead, Block shares tumbled due entirely to market forces. Its price chart very closely resembled that of Bitcoin and the Proshares UltraPro QQQ ETF, which is a good proxy for growth stocks right now.

SQ, TQQQ, BTC Total Return Level data by YCharts

Investors are clearing out of volatile assets, including cryptocurrencies and high-valuation growth stocks. Block is a growth stock that is linked heavily with cryptos and blockchain technology, so it never really stood a chance in April's market.

Now what

Block is dealing with a slowdown, but it's still posting great growth results. The company's gross profit rose 34% last quarter. This marked a deceleration in the rate of expansion, but it broke a relatively flat trend from the prior three quarters. Gross profit inched forward in its Square business unit, while Cash App had a breakout month that propelled the whole company higher. Adjusted EBITDA rose over the prior quarter, but it's still down year over year. Block's recent acquisition of Afterpay also contributed to that growth, so its "organic" expansion was slightly worse than the headline figures would imply.

The value of transactions being processed by the company declined last quarter. That's likely to be a concern for investors. Consumers are hurting from inflation, and business activity could slow as interest rates rise from the Fed's aggressive monetary tightening. Be sure to monitor these trends over the next few quarters from Block.

Block derives a significant portion of its revenue from Bitcoin, and it has purchased more than $200 million in Bitcoin, which it holds on its balance sheet. As a result, the stock is likely to be highly correlated with the cryptocurrency markets for the foreseeable future. Bitcoin only contributed 3.4% of Block's gross profit in the last quarter, and its Bitcoin holdings amount to less than 1% of total assets on the balance sheet, so the market might be overreacting to crypto volatility in terms of its overall impact on the value of Block's business. This can create opportunities for long-term investors, but it will make the stock even more volatile in the short term.

Block remains a compelling opportunity to invest in a business that's committed to unlocking the value of Web3, the blockchain, and cryptocurrencies. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

A funny thing happened to Block (NYSE: SQ) stock today (well, funny unless you own it -- if you own it, it's just weird). Investment megabank Goldman Sachs initiated coverage of Block (formerly known Square) with a coveted buy rating and a $173 price target implying 22% upside in the stock. 

But instead of going up in response to the upgrade, Block stock went down 3.3% as of 1:50 p.m. ET. 

So what

StreetInsider.com has the details.

"SQ is well positioned to benefit from Cash App's growing monetization from new product features (e.g., tax preparation, card spending, cash management, stock investing, Bitcoin)," writes Goldman, "while enjoying ongoing user growth from the network effects of P2P payments, as well as Square's continued share gains" among small and medium businesses.

The analyst is also optimistic about Block's purchase of Afterpay, predicting that its entry into the buy now, pay later market will "generate synergies and integrate the Square and Cash App ecosystems through the addition of new consumers and merchants, as well as helping to establish commerce & brand discovery features into Cash App."

Now what

So far, so good -- but why does any of the above add up to investors selling Block stock today, instead of buying it?

Honestly, I don't think they do. Rather, what I suspect we see happening here is investors taking advantage of Goldman Sachs' positive note to cash in some of their recent profits from Block stock. Just two weeks ago, Block stock was selling for less than $95 a share -- but it tipped the scales at nearly $147 last night, a 55% improvement in the space of 16 days.

Recall, too, that with only $166 million in trailing net income, Block stock currently costs nearly 500 times trailing earnings, which is quite a lot to pay even for a company pegged by analysts for tremendous 37% annualized earnings growth over the next five years.

Simply put, Block stock had a great run-up over the past couple of weeks. It was due for a pullback -- no matter what Goldman Sachs had to say about it today. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Block (NYSE:SQ) stock dropped today appeared first on The Motley Fool Australia.

Block shares are up an extremely pleasing 13.03% at $175.54 a share. That puts the US-based payments company formerly known as Square at close to a 35% gain over just the past 5 days alone. So what's behind this extraordinary rise this Tuesday?

Well, it's not entirely clear. Block did report its full-year financial results last week, which seems to have given the company a bit of a turbocharge. As my Fool colleague Bernd covered at the time, Block recorded a 62% year-on-year rise in gross profits to $4.42 billion. That came in addition to a 104% increase in adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) to $1.01 billion.

These results saw the Block share price rise a whopping 39% at one point on the day they were released. This enthusiasm has continued to hold ever since.

Block shares square up

But we do have some more recent news that could be affecting today's big rise too. According to NABtrade, Block's US shares have received some positive attention from some brokers across the Pacific. The site reports that BMO Capital Markets has upgraded Block Inc (NYSE: SQ) shares to 'outperform'.

The broker likes Block's acquisition of Afterpay as well as the strength of its flagship Cash App service: "We look forward to guidance regarding synergies expected from SQ's recently-completed acquisition of Afterpay, and the benefits of connecting SQ's merchant-facing Square business to its consumer-facing Cash App business."

BMO has given Block's US shares a price target of US$159, which is well above the company's last price of US$127.50.

So this optimism for Block might be responsible for the goodwill flowing into block's ASX listing that we are seeing today. Either way, it is certainly a dramatic turnaround for a company that, until just a few days ago, was down close to 35% in 2022 alone. Its year-to-date losses now stand at just 0.6%

At the current Block share price, this payments company has a market capitalisation of US$73.96 billion.

The post Here's why the Block (ASX:SQ2) share price is surging 13% today appeared first on The Motley Fool Australia.

It's regaining some of its notable losses from its journey on the ASX so far amid news the company – formerly known as Square – will be among the first to test a new blockchain accelerator chip.

At the time of writing, the Block share price is $158.02, 5.24% higher than its previous close.

Let's take a closer look at what might be boosting the fresh-faced ASX stock today.

Block share price surges 5% on Tuesday

The Block share price is moving upwards this week, following up yesterday's 1.8% gain with today's 5% surge.

It's a much-needed boost for the stock. It tumbled 16.5% between listing on 20 January – after absorbing former market favourite, Afterpay ­– and Friday's close.

The embattled tech sector is also moving higher today, with the S&P/ASX 200 Info Tech Index (ASX: XIJ) and the S&P/ASX All Technology Index (ASX: XTX) gaining 1.05% and 1.03% respectively.

That makes the tech sector the best-performing industry on the S&P/ASX 200 Index (ASX: XJO), which is slumping 0.5% on Tuesday.

It also places Block as the third best-performing ASX 200 share, behind Sims Ltd (ASX: SGM) and SEEK Limited (ASX: SEK).

Could this be boosting Block's stock?

While there's been no news from Block lately, the company's New York listing, Block Inc (NYSE: SQ), surged 3.49% in Monday's session amid news released by Intel Corporation (NASDAQ: INTC).

The computing technology company has announced it's working to create a low-energy blockchain accelerator, and Block will be among 3 companies with first dibs on the technology.  

The blockchain tech will be ready to ship later this year, said Intel. It chose the three initial customers due to their sustainability goals.

Senior vice president and general manager at Intel's accelerated computing systems and graphics group, Raja M. Koduri, commented:

Intel Labs has dedicated decades of research into reliable cryptography, hashing techniques and ultra-low voltage circuits. We expect that our circuit innovations will deliver a blockchain accelerator that has over 1000x better performance per watt than mainstream GPUs for SHA-256 based mining. 

The post Why is the Block (ASX:SQ2) share price squaring away such healthy gains today? appeared first on The Motley Fool Australia.

Payment and digital banking company Block (NYSE: SQ) has struggled over the past several months, falling nearly 60% from its all-time highs as of Monday's prices. Investors have soured on the stock, flocking to more defensive companies; meanwhile, tech giant Apple's (NASDAQ: AAPL) decision to launch iPhone payment terminals, becoming a direct competitor with the Square seller ecosystem, could be making sentiment worse.

A company's path is not always smooth or straightforward, and understanding the difference between fundamental problems and temporary distractions is key to identifying good buying opportunities. Is Block a broken stock or a broken company? Here are three key points to consider when considering Block shares.

1. Digital banking through Cash App

When boiled down to its most simple form, Block's business makes it simple to move money between people and merchants. For merchants, the seller ecosystem has grown from a payment terminal into an all-in-one hardware and software package that merchants can use to run their businesses.

However, Cash App has emerged on the consumer side; what started as a simple app for peer-to-peer payments, like "Hey, send me $10 for pizza last night," has steadily involved into a feature-rich app capable of handling the majority of your financial needs. Users can now deposit checks, buy stocks and Bitcoin (CRYPTO: BTC), and order the Cash Card, a debit card that draws from your Cash App balance, like any bank card.

In its most recent quarter, Cash App generated $512 million in gross profit, a 33% year-over-year increase. The company focuses on gross profit instead of revenue because Bitcoin trade volume inflates revenue but adds almost no gross profit to the business. According to data tracking company App Annie, Cash App's momentum appears strong; it was a top 10 smartphone app in the US in 2021.

Cash App is disrupting banking, creating digital tools for its users to manage their money. Block benefits from lower customer acquisition costs because there are no buildings to manage or staff to pay. Traditional banks still control most consumer wealth, but Block's younger users could mean more market share for the company over time. It opened the app up to users aged 13-17 in 2021.

2. Square seller ecosystem versus Apple

Apple made headlines by announcing that merchants could soon use their iPhones as payment terminals, but how much of a threat is this to Block? Nobody will know for sure until it plays out over future quarters, but I suspect it won't be as significant a threat as one might think.

Consider the value that the Seller ecosystem has today. The payment terminal itself is a small piece of the value that Block has built. Frankly, it's not the payment terminal that's the secret sauce. Instead, it's the many tools Block offers through the Seller platform, including point-of-sale, inventory management, marketing, gift cards, loyalty programs, banking, and more.

There's so much that the ecosystem can do that it probably doesn't make sense for many merchants beyond the most basic to leave it in favor of Apple's payment terminal. Apple could always prove otherwise, and perhaps its tap-to-pay gains serious traction, but I'm willing to give Block the benefit of the doubt for now.

3. Afterpay could drive growth moving forward

The negativity surrounding Block has washed away much of the positivity around its acquisition of buy now, pay later company Afterpay, which recently closed. Block's wasted no time rolling out features, including adding buy now, pay later features to its Seller ecosystem and plans to integrate it with Cash App too.

Afterpay already had roughly 98,000 merchants on its platform, selling to more than 16 million active users. Sales on Afterpay, the value of transactions on the platform, grew 102% to $22.4 billion in 2021, generating $693 million in net revenue for the company. Afterpay also gives Block more international exposure; the company has a large footprint in Australia, North America, and a presence in the United Kingdom.

According to Allied Market Research, the buy now, pay later industry could grow more than 40% per year to reach nearly $4 trillion in transaction volume by 2030. Afterpay gives Block direct exposure to this growth, both as a stand-alone buy now, pay later business and as a tool for bringing potential new users into the Seller and Cash App ecosystems.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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