Bitcoin payments firm Block falls 7% after quarterly loss

Bitcoin payments firm Block falls 7% after quarterly loss

Jack Dorsey-led Block Inc, a digital payments firm that has been big onBitcoin, fell by nearly 7% in premarket trading on Friday after the company reported a loss in quarterly results on waning interest in cryptocurrencies.

The stock has fallen more than 44% this year.

Block reported a loss of 36 cents per share in the second quarter, compared to a loss of 40 cents last year, and said it had slowed hiring and would cut its 2022 investment target by $250 million.

The act of cutting spend suggests that SQ is bracing for weaker growth, JPMorgan analysts wrote in a note.

The brokerage maintained its overweight rating and $107 price target for the stock, citing earnings potential from its buy now, pay-later business, which earned $150 million in gross profit in the quarter.

The Federal Reserve tightening of the monetary policy has resulted in a selloff of risky assets, which has ebbed investor enthusiasm over digital currencies this year.

It has hurt companies such as Block, which rode the bitcoins frenzy to post robust earnings last year.

Block's gross profit fell 24% to $41 million in the quarter, from $55 million a year ago.

During the eight trading sessions prior to the printing, the shares had rallied by almost 35%. Analysts at BTIG said that the company would have to produce a nearly flawless report in order for that surge to continue.

Jefferies and RBC Capital Markets raised their price targets, saying that Block's decision to cut costs would position it strongly to deal with a tough economic environment.