What to Expect with SQ Stock Earnings Report

What to Expect with SQ Stock Earnings Report

Block Inc (NYSE: SQ), the payment provider formerly known as Square, will be reporting its Q4 2022 earnings this Thursday, February 24. However, the typical market reaction of “good report = stock price rise” and “bad report = stock price fall” may not apply as straightforwardly in this case.

Market Dynamics and Recent Trends

In the past month, we’ve seen that even a favorable earnings report doesn’t always lead to a stock price increase. A notable example is Nvidia (NASDAQ: NVDA), which reported strong Q4 2022 results on February 16. Despite beating earnings expectations and providing strong guidance, NVDA’s stock sold off, dropping 12% since its earnings call.

Conversely, an unfavorable earnings report could hurt SQ stock significantly more than in the past. Given that growth tech stocks have been under pressure due to upcoming U.S. Federal Reserve rate hikes and the potential end of post-COVID revenue surges, investors may be more sensitive to disappointing results.

Will SQ Suffer a Similar Fate to PayPal?

PayPal (NASDAQ: PYPL), a key competitor to Block, reported its Q4 2021 earnings in early February. Despite beating earnings expectations, the company’s poor guidance for Q1 2022 led to a massive 46% drop in its stock price YTD. Currently, SQ shares have lost 40% of their value this year, and a similarly poor earnings report could push the stock’s decline into the 50-60% range. Tech stocks have shown vulnerability, as evidenced by Meta Platforms (NASDAQ: FB), which saw a 25% drop (USD 230 billion loss in market cap) on February 3.

Is There a Buying Opportunity with SQ Stock?

Despite the potential for a decline, some analysts believe that a larger sell-off in SQ stock could present a buying opportunity for long-term investors. Firms like Deutsche Bank, Credit Suisse, SeekingAlpha, and MarketBeat have set price targets in the mid-USD 200 range, suggesting substantial upside potential for the stock if the price continues to fall in the short term.

As always, investors should weigh the risks and consider whether they’re ready to buy in at a lower price point with the expectation of long-term growth.