Block Inc (ASX: SQ2) shares are taking a dive today.
Shares in the global S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock – which acquired Afterpay in January 2022 – closed on Friday trading for $109.51. At the time of writing on Monday, shares are swapping hands for $97.68 apiece.
That puts Block shares down a precipitous 10.8% today.
So, what's going on?
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Why are investors bidding down the ASX BNPL share?
Block shares are tumbling again today after closing down 5.8% on Friday.
The heavy selling pressure follows the release of the ASX BNPL stock's quarterly update, which hit the wires on Friday morning Aussie time.
On the surface, the quarterly results looked reasonably solid.
Gross profit for the three-month period increased 27% year on year to US$1.9 billion
And gross payment volume was up 12% from the prior corresponding period to US$59 billion. However, this could be one metric that is pressuring Block shares, as consensus estimates had pencilled in more robust gross payment volume growth of US$59.7 billion.
And on the bottom line, Block still reported a net loss of US$123 million for the quarter.
Investors reacted even more negatively to the update in the United States markets.
The BNPL company is dual-listed in Australia and the US. And Block shares crashed 13.6% on the NYSE on Friday (overnight Aussie time).
Much of the concern is also related to increasingly stressed consumers, particularly in the company's European and Australian segments.
According to Block CEO Jack Dorsey (quoted by The Australian Financial Review):
These markets have not seen the growth and profitability we had expected over the past several years. We see an opportunity to shift these resources towards strategic areas that have a higher potential return on investment.
Block has wound down Afterpay's Clearpay subsidiary in France, Italy and Spain.
As for the headwinds for Block shares coming out of Australia, Block CFO Amrita Ahuja added:
What we've seen is international markets have continued to see some of those macro related headwinds, which are more pronounced in Australia in the second quarter, albeit with overall growth from BNPL.
Still, the ASX BNPL company upgraded its earnings before interest, tax, depreciation and amortisation (EBITDA) guidance for 2023.
Block had been forecasting adjusted EBITDA of US$1.36 billion for the full year. The company increased that forecast to an adjusted EBITDA of US$1.5 billion.
How have Block shares been tracking?
With today's big intraday fall factored in, Block shares are down 23% over 12 months.
The ASX BNPL stock remains up 6% since the opening bell on 3 January.
