The shares of Jack Dorsey-led Block Inc, a digital payments firm that has been big on bitcoins, 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 with a profit of 40 cents a year ago, 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 underlying earnings potential from its buy now, pay-later business, which earned $150 million in gross profit in the quarter.
As the Federal Reserve tightens its monetary policy and red-hot inflation have resulted in a selloff of risky assets, investor enthusiasm has ebbed this year.
It has hurt companies such as Block, which rode the bitcoins frenzy to post robust earnings last year.
Block's gross profit, or what the company earns from the spread on buying and selling the criptocurrency, fell 24% to $41 million in the quarter from $55 million a year ago.
The stock market had rallied by almost 35% during the eight trading sessions prior to the printing. Analysts at BTIG said that the company likely would have to produce a nearly flawless report in order to continue the surge.
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.