Ah yes... I remember the good ol' days of Square (now known as Block). It was one my best investments in my short career as a trader/investor. Way back when, the story was quite obvious: they had created the best solution for small businesses to sell goods & services either in a store or online.
It was fast and effortless.
The rise of Block, and subsequent drop, has been something to marvel at. I had sold my position many moons ago, but it's remained on my watchlist because I like the company and what it stands for.
Some people have given it a very hard time for its rebranding to Block, its new logo, and mission. However, considering that they are payment experts, I think it's notable and worth watching.
Nevertheless, can the stock really make a comeback? The chart is horrendous.
One factor contributing to this downward trend is the significant acquisition of Afterpay, which required a substantial amount of cash and stock, impacting Block's balance sheet. I still have NO idea why they paid this much to acquire an average company.
I guess the hype and FOMO of BNPL really got to them.
In August 2021, Block announced its intent to acquire Afterpay, a prominent "buy now, pay later" fintech company. I think the story made sense - it gave them the capability to add their own credit network. However, the sheer size of the transaction was just bonkers.
Block currently has a market cap of $28 billion. BUT, they acquired AfterPay for $29 billion! Ouch... the company is now worth less than their recent buyout.
It's important to note that such significant acquisitions often take time to yield the intended benefits. The share price decline may be partially attributed to investor impatience and a lack of immediate clarity on how Block plans to integrate Afterpay into its broader ecosystem.
The question is simple: will AfterPay ever yield the payout that Block intended it to have? If the answer is anything but "yes - it's happening" there's no reason to trade or invest in this any further. HOWEVER, if there are glimpses that show, just maybe, Block made a smart acquisition, adding a new layer to their payment network that is only just starting, then the return to highs is not far-fetched at all.
The trade is simple: watch to see how Block continues to integrate AfterPay, and, it is starts to work, it's worth evaluating further over 1-3 year comeback in share price.
It was fast and effortless.
The rise of Block, and subsequent drop, has been something to marvel at. I had sold my position many moons ago, but it's remained on my watchlist because I like the company and what it stands for.
Some people have given it a very hard time for its rebranding to Block, its new logo, and mission. However, considering that they are payment experts, I think it's notable and worth watching.
Nevertheless, can the stock really make a comeback? The chart is horrendous.
One factor contributing to this downward trend is the significant acquisition of Afterpay, which required a substantial amount of cash and stock, impacting Block's balance sheet. I still have NO idea why they paid this much to acquire an average company.
I guess the hype and FOMO of BNPL really got to them.
In August 2021, Block announced its intent to acquire Afterpay, a prominent "buy now, pay later" fintech company. I think the story made sense - it gave them the capability to add their own credit network. However, the sheer size of the transaction was just bonkers.
Block currently has a market cap of $28 billion. BUT, they acquired AfterPay for $29 billion! Ouch... the company is now worth less than their recent buyout.
It's important to note that such significant acquisitions often take time to yield the intended benefits. The share price decline may be partially attributed to investor impatience and a lack of immediate clarity on how Block plans to integrate Afterpay into its broader ecosystem.
The question is simple: will AfterPay ever yield the payout that Block intended it to have? If the answer is anything but "yes - it's happening" there's no reason to trade or invest in this any further. HOWEVER, if there are glimpses that show, just maybe, Block made a smart acquisition, adding a new layer to their payment network that is only just starting, then the return to highs is not far-fetched at all.
The trade is simple: watch to see how Block continues to integrate AfterPay, and, it is starts to work, it's worth evaluating further over 1-3 year comeback in share price.
I work at TradingView helping to build charts, tools, and software for everyone interested in financial markets.
Twitter: twitter.com/scheplick
Blog: scheplick.com/
Twitter: twitter.com/scheplick
Blog: scheplick.com/