Shares of Block Inc. (SQ), the financial technology company co-founded by Jack Dorsey, surged on Tuesday, closing up 4.62% and gaining over 16% in the past five days. This positive movement was driven by Piper Sandler’s Managing Director and Senior Research Analyst Arvind Ramnani initiating coverage of the company with an “overweight” rating and setting a price target of $83 per share. This optimistic outlook for Block comes at a time when the company continues to focus on its cryptocurrency endeavors and aggressively expand its presence in the burgeoning fintech market.
Block shares significantly outperformed their benchmark indices on Tuesday, as the NYSE Composite closed 0.81% lower and the Russell 2000 dropped 1.77%. The positive sentiment surrounding Block stems from Ramnani’s analysis, which highlights the company’s impressive ability to launch new ventures, including its foray into cryptocurrency, and successfully penetrate large fintech markets.
Ramnani estimates a massive $130 billion total addressable market for Block’s Square payments business and an equally impressive $75 billion market for its popular Cash App payment app. This confidence in Block’s future growth potential is further solidified by Dorsey’s consistent reaffirmation of Block’s Bitcoin-centric vision.
This bullish outlook comes on the heels of Block’s third-quarter financial report, which revealed mixed results. While the company beat analysts’ expectations for earnings per share, it missed revenue targets. However, Dorsey’s commentary during the earnings call injected optimism, emphasizing Block’s commitment to establishing Bitcoin as a native currency for the internet. He believes that this strategy will significantly accelerate Block’s business growth by facilitating faster money transfers and expanding its Cash App and Square products into every market globally.
Dorsey also highlighted the company’s confidence in Bitcoin’s ability to boost its mining chip offerings, further solidifying Block’s dedication to the cryptocurrency ecosystem.
The positive sentiment surrounding Block is reflected in the consensus estimates of analysts tracking the stock, with a majority rating it as a “buy”. Notably, Needham analyst Mayank Tandon maintained a Buy rating while raising the price target from $80 to $90. JPMorgan analyst Tien-tsin Huang reiterated an Overweight rating and price target of $90, while Stephens analyst Charles Nabhan reaffirmed an Overweight rating and price target of $90.
Despite the recent positive developments, Block’s shares experienced a slight dip of 1.57% in pre-market trading on Wednesday, according to Benzinga Pro data. The relative strength index at 55.59 indicates that the stock is currently neither overbought nor oversold.
As Block continues to navigate the evolving fintech landscape and aggressively pursue its Bitcoin-centric strategy, investors will be closely watching to see how the company’s initiatives translate into tangible results and sustained growth.
