Unlocking Block (SQ) Stock’s Potential Amid Q4 Earnings Momentum

Written By Michael Gary Scott

Recent Performance and Projected Earnings

Block, Inc SQ witnessed a 5% hike as it gears up for the fourth-quarter earnings announcement scheduled after the market close on Thursday.

After the third-quarter earnings surprise on Nov. 2, Block’s stock soared, reaching an 18% surge before finally settling for a 10% increase.

In the previous quarter, Block’s reported revenue of $5.62 billion, surpassing the estimated $5.441 billion. The earnings per share stood at 55 cents, exceeding the consensus by 8 cents.

Analysts’ Projections and Market Trends

Market analysts anticipate earnings per share of 59 cents and revenues amounting to $5.699 billion for the concluding quarter.

Ahead of the earnings release, Wedbush analyst Moshe Katri upgraded Block from Neutral to Outperform, elevating the price target to $90 from the previous $70.

Trading Strategies and Insights

For those eyeing to capitalize on Block’s potential upside, considering diversifying with the AXS 2X Innovation ETF TARK could be a strategic move as it aims to mirror the performance of the tech-heavy ARK Innovation ETF ARKK, which holds a 6.02% stake in Block.

On the flip side, traders bearish on Block might find the AXS Short Innovation Daily ETF SARK an appealing choice, designed to inversely track ARKK’s daily performance.

Technical Analysis and Outlook

Technically, Block’s stock appears neutral leading up to the earnings release, showing a sideways trend since the beginning of January. It should be noted that holding investments during earnings can be precarious, as stock reactions often defy expectations post-earnings.

The Block Chart: Trading in the $62-$70 range since Jan. 3, Block remains below the 50-day simple moving average (SMA) but above the 200-day SMA, indicative of a bullish cycle with the 50-day SMA trending above the 200-day.

  • Wednesday saw Block forming a lower low, followed by a doji candlestick suggesting a potential reversal. Thursday’s session confirmed this with a slight gap up, hinting at a bullish kicker candlestick formation.
  • Bulls hope for a positive reaction to the earnings, solidifying the bullish trend with a second gap up on Friday. Conversely, bears anticipate a negative response, pushing Block under $62 to confirm a downtrend.
  • Key resistance levels for Block lie at $69.60 and $78.19, with support at $62.50 and $53.97 below.
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