Jack Dorsey’s Block payments firm joins list of Bitcoin-related firms facing downgrades. Investment bank Mizuho downgraded Block from Buy to Neutral on Thursday as management has a significant focus on Bitcoin despite it contributing less than 5% to Block’s gross profit. Recently, several companies, including MicroStrategy, Coinbase, and Robinhood, faced downgrades amid Bitcoin’s demise.
Block downgraded by Mizuho Analyst due to Bitcoin Focus
Mizuho’s analyst Dan Dolev downgraded Block (SQ), the parent company of payments company Square, to neutral from buy on Sept. 22. Also, the analyst lowered the price target to $57 from $125. He cites management’s increased focus on Bitcoin and user fatigue related to point-of-sale and buy-now-pay-later as reasons for the downgrade.
“After years of being rightfully considered the most innovative name in payments, we believe that user fatigue, inflows have stagnated, and the best-in-class POS is being lost [point-of-sale] Status and BNPL [buy-now-pay-later] Misexecutions block the growth of SQ.”
Last year, a Mizuho analyst gave the company’s stock an above-average rating as the price traded above $200 amid Bitcoin’s rally. Mizuho told clients that the company has tremendous growth potential like JPMorgan. However, Bitcoin’s demise has impacted the company’s financial performance.
Other companies, including MicroStrategy, Coinbase, and Robinhood, also suffered a downgrade as Bitcoin’s price fell over 70% from its November 2021 peak. Michael Saylor’s MicroStrategy reported losses of over $1 billion in its June financial report. The crypto market crash forced investment banks, including Goldman Sachs, to downgrade Coinbase to “Sell.”
While Mizuho’s analyst Dan Dolev believes Block has potential. However, management’s increased focus on Bitcoin, despite Bitcoin accounting for less than 5% of gross profit in the first half of 2022, is a cause for concern. Meanwhile, increasing competition in POS and BNPL is blocking its growth.
Block’s shares fell almost 6% to $56.07 as a result of a downgraded stock rating. Block (SQ) was also downgraded by Evercore ISI and SMBC Nikko Securities America last week.
Bitcoin (BTC) price war below $20,000
Bitcoin (BTC) price is struggling below the $20,000 level on the strength of the US Dollar and macro factors. At the time of writing, BTC price is trading at $18,998, down over 1% in the last 24 hours.
Popular analyst Rekt Capital predicts that the bitcoin price may actually drop below $15,000 based on historical chart patterns. Bitcoin would likely fall below $15,000.
Varinder is a technical writer and editor, technology enthusiast, and analytical thinker. Fascinated by disruptive technologies, he has shared his knowledge of blockchain, cryptocurrencies, artificial intelligence and the Internet of Things. He has long been associated with the blockchain and cryptocurrency industry and is currently reporting on the latest updates and developments in the crypto industry.
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