Impending Earnings Ignite Market Activity
Block, Inc SQ experienced a more than 5% surge Thursday as it approaches its fourth-quarter earnings announcement after the market close.
Following the third-quarter earnings beat on Nov. 2, the stock soared over 18% at one point the next day before settling for a 10% close higher.
Historical Perspective on Earnings
During the last quarter, Block reported revenue of 5.62 billion, surpassing the $5.441-billion consensus estimate. It also reported earnings per share of 55 cents, outperforming the consensus estimate of 47 cents.
Looming Expectations
Analysts project Block’s fourth-quarter earnings per share at 59 cents on revenues of $5.699 billion.
Market Analysts Assess
In anticipation of the upcoming announcement, Wedbush analyst Moshe Katri elevated the rating on Block from Neutral to Outperform and raised the price target from $70 to $90.
Investors seeking to capitalize on potential upsides in Block stock with diversified exposure might consider entering the market via the AXS 2X Innovation ETF TARK. TARK aims to deliver 200% of the daily performance of Cathie Wood-led ARK Innovation ETF ARKK, with the latter holding a 6.02% weight in Block.
For traders taking a bearish stance on Block, the AXS Short Innovation Daily ETF SARK is designed to inversely track the daily performance of ARKK.
Technical Market Evaluation
From a technical analysis standpoint, Block’s stock appears neutral as it approaches the earnings announcement, maintaining a horizontal pattern since Jan. 3. It’s important to note that holding stocks or options over an earnings announcement is akin to gambling as stocks may react bullishly to an earnings miss and bearishly to an earnings beat.
The Block chart indicates that the stock has been trading within the $62 and $70 range since Jan. 3, mostly below the 50-day simple moving average (SMA) and above the 200-day SMA. The 50-day SMA is trending above the 200-day SMA, signifying that Block is in a bull cycle.
- On Wednesday, Block formed a lower low, offsetting its slight uptrend, and displayed a doji candlestick, signaling the occurrence of a local bottom. Subsequently, on Thursday, Block responded to the doji candlestick, opening slightly higher and showing indications of printing a bullish kicker candlestick.
- Bullish traders hope for a positive reaction to Block’s earnings and confirmation of Thursday’s bullish kicker candlestick, ideally leading to a second gap up on Friday, potentially countering a possible downtrend.
- Bearish traders anticipate a negative response to Block’s earnings, resulting in the stock dropping below the $62 mark on Friday. Should this occur, Thursday’s high-of-day will confirm Block’s downtrend by forming a lower high.
- Block faces resistance at $69.60 and $78.19, and support at $62.50 and $53.97.
