Digital payments firm Block has replaced the head of its merchant Square business with founder Jack Dorsey amid slowing growth. SQ stock fell Tuesday on the news.
Block late Monday announced that Square Chief Executive Alyssa Henry will leave on Oct. 2 after nine years at the company. Dorsey, Block's CEO, will lead the Square business.
"Given her long history with the company, Henry's departure would be notable under any circumstances," Lisa Ellis, analyst at SVB MoffettNathanson, said in a report. "The performance of Square – the business that Henry runs – has been lackluster for the past few quarters."
Ellis added: "This deceleration has fueled concerns that Square's performance is lagging other integrated POS (point-of-sale) providers and has a been a key factor pressuring the stock over the past few months."
In midday trades on the stock market today, SQ stock fell 3.1% to 49.67. As of Monday's close, Square stock had retreated 19% in 2023 while the Nasdaq composite had gained 32%.
At Wedbush, analyst Moshe Katri said in a report: "Given SQ's recent underperformance relative to peer, Fiserv's Clover, this leadership transition shouldn't be surprising, with ongoing strategic assessment of SQ's merchant-facing business long overdue."
"To us, a change in leadership after a prolonged period of deteriorating trends is more a reflection of past performance than it is a signal for the go-forward outlook," Jefferies analyst Trevor Williams said in a report.
SQ Stock: Technical Ratings
"We expect the stock to come under further pressure in the coming days as investors will likely interpret the hasty departure as being a negative signal for near-term gross payment volume trends. While there was no use of 'interim' to describe Mr. Dorsey's new role leading Square, we don't expect the move to necessarily be a permanent solution."
In its core businesses, Square stock aims to build a two-sided digital payments ecosystem, with products designed for both merchant sellers and consumer buyers.
For merchants, Square makes credit-card readers that plug into mobile devices. Its Square Capital division provides loans to sellers. The Square Cash App helps individuals manage money, buy stocks and cryptocurrency, and more.
Meanwhile, SQ stock holds an entry point of 89.87. Further, Square stock owns a Relative Strength Rating of 16 out of a best-possible 99, according to IBD Stock Checkup. The best stocks tend to have an 80 or better RS Rating.
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