5 Fintech Stocks Getting Hammered Amid Economic Weakness

2. Block, Inc. (NYSE:SQ)

YTD Share Price Decline as of July 28: 55.64%

Number of Hedge Fund Holders: 84

Block, Inc. (NYSE:SQ) is based in San Francisco, California, and the company provides card payments, reporting and analytics, and next-day settlement. As of July 28, the stock has plunged about 56% year to date. On July 26, Wells Fargo analyst Jeff Cantwell lowered the price target on Block, Inc. (NYSE:SQ) to $120 from $165 and reaffirmed an Overweight rating on the shares ahead of the Q2 results. The analyst noted that the second quarter data from Cash App and Square looks robust, but some headwinds are coming from Afterpay and Bitcoin. The analyst sees mixed results ahead of the Q2 report.

According to Insider Monkey’s data, 84 hedge funds were long Block, Inc. (NYSE:SQ) at the end of the first quarter of 2022, down from 96 funds in the prior quarter. Cathie Wood’s ARK Investment Management is the leading stakeholder of the company, with 8.30 million shares worth $1.12 billion. 

Here is what Farrer Wealth Advisors has to say about Block, Inc. (NYSE:SQ) in its Q1 2022 investor letter:

“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”