Summertime is the ideal time for block parties. And Block — the parent of Square, Cash App, Spiral, TIDAL and TBD — looks to make a splash with a rebound into buy range. Having landed a spot on the IBD Breakout Stocks Index, SQ stock is up sharply from its May lows and continuing to rise.
Square changed its name to Block in 2021, expanding its focus on cryptocurrency and a variety of business lines. That same year it acquired Afterpay, a pioneer of the Buy Now, Pay Later (BNPL) trend.
The Square tools and ecosystem encompass commerce solutions, business software, and banking services for enterprises of all sizes. Global in scope, Square supports sellers from Australia to Ireland, Canada to Japan, and across all 50 United States.
Cash App aims to redefine the world's relationship with money by making it more relatable, instantly available, and universally accessible.
Spiral builds and funds free, open-source projects to advance the use of Bitcoin. Related to that, TBD is building an open developer platform to make it easier to access Bitcoin and other blockchain technologies.
TIDAL is a global platform for bringing fans closer to the artists they love, as well as providing artists the tools to succeed as entrepreneurs.
See Who Joins SQ Stock On The IBD Breakout Stocks Index
Square Explores Adventures With Afterpay
On Tuesday, Afterpay unveiled more ways to pay for home, travel and more this summer. The BNPL leader has scaled its Pay Monthly product to thousands of new merchants, offering consumers increased flexibility in splitting their next premium product or vacation over a six- or 12-month period. Lululemon Athletica is among the lineup of retailers offering Afterpay's Pay Monthly product to consumers online.
As for travelers, consumers can split their monthly purchases at partners such as Alternative Airlines and Expedia.
SQ Rises On 122% Earnings Growth — With More To Come
SQ stock earns a 93 Composite Rating, tying 2020 IPO Shift4 Payments for top billing in the Credit Card/Payment Processing group.
While Block did not make this month's list of new buys by the best mutual funds, the company's 122% earnings in Q1 sparked signs of institutional demand. It sports a A- Accumulation/Distribution Rating and a 1.3 up/down volume ratio. Plus, 33 funds with an A+ or A rating from IBD own shares in SQ stock.
Block is on deck to report Q2 numbers on Aug. 3. Analysts forecast another triple-digit EPS gain of 102% on the way to a 73% gain for the year.
The payment processing and crypto play has generated average annual sales growth of 50% over the past three years. Revenue has accelerated over the past two quarters, coming in at just under $5 billion in Q1, a 26% year-over-year gain.
SQ Stock Rebounds Toward New Breakout
Last year's bear market was rough on tech stocks, and SQ stock was no exception. But Block has rebounded off its lows and its 10-week moving average is now set to retake its 40-week line. Its relative strength line is also trending sharply higher.
Showing its resurging strength, SQ stock cleared a trendline last month around 66. Block is now working on a conventional cup showing an 89.97 buy point. See if the stock forms a handle to offer an earlier entry.
Meanwhile, industry peer FOUR stock is also setting up as Afterpay BNPL partner LULU stock stretches toward a buy point.
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Follow Matthew Galgani on Twitter at @IBD_MGalgani.
