The Quarter in Review: Performance and Expectations
Block, Inc SQ registered a robust 5% surge on Thursday ahead of its impending fourth-quarter earnings report. The company had produced an impressive 18% spike in stock value following a third-quarter earnings beat. Revenue for that quarter stood at 5.62 billion, surpassing the consensus estimate of $5.441 billion, with an earnings per share of 55 cents, outperforming the consensus estimate by 8 cents.
Analyst Expectancy and Positioning
The onus is now on analysts who, on average, collectively anticipate Block to report earnings per share of 59 cents on revenues of $5.699 billion for the fourth quarter. Boosting investor sentiment, Wedbush analyst Moshe Katri upgraded Block from Neutral to Outperform, elevating the price target from $70 to $90 in anticipation of positive earnings results.
Strategic Implications and Positions
For market participants seeking to fortify their position in Block, the AXS 2X Innovation ETF TARK offers a compelling diversification opportunity. On the contrary, those adopting a bearish stance on Block can consider the AXS Short Innovation Daily ETF SARK. However, the risks inherent to this strategy are indisputable, given that market response to earnings reports can defy conventional wisdom.
Technical Analysis and Chart Commentary
The Block Chart: Delving into technical analysis, Block’s stock appears neutral as it traverses a lateral path since Jan. 3. Albeit, it is worth mentioning that positioning holdings or options around earnings is akin to gambling, as stocks may react bullishly to a miss and bearishly to a beat.
- Wednesday witnessed Block forming a lower low, retracting its marginal upward trend and printing a doji candlestick, suggestive of the establishment of a local bottom. Thursday saw a bullish kicker as Block reacted to the doji candlestick, opening marginally higher.
- Bullish traders are banking on Block’s positive earnings response, with an eye for the stock confirming Thursday’s bullish kicker by marking a second gap up on Friday, countering any potential downward trend.
- Conversely, bearish traders anticipate a negative reaction to earnings and a decline under the $62 mark on Friday, solidifying Thursday’s high-of-day pattern as a lower high and confirming Blok’s downward trajectory.
- Block grapples with resistance at $69.60 and $78.19, whilst support rests at $62.50 and $53.97.