Block's bitcoin fixation hurting the business, Mizuho says

Yahoo Finance Live’s Brad Smith discusses stock performance for Block after Mizuho downgrades its shares from Buy to Neutral.

影片文字轉錄稿

BRAD SMITH: I've been tracking this one on the day. Shares of-- well, formerly known as Square-- Block, they are down by about 4.9%. Mizuho downgraded the company from buy to neutral, saying that its fixation on Bitcoin is hurting its core business. And that's putting it nicely compared to what they actually said. And that it's no longer deserving a premium rating in payments.

This was like the most strongly worded downgrade to just neutral that I think I've ever seen because some of the other issues that they pointed out, user fatigue, plateauing inflows, moderating monetization, slower growth. And they're essentially looking at some of their estimates going forward from here. Slowing user penetration in Cash App and especially among this core demographic of users in 18 to 45-year-old Americans. They're seeing some slowing growth there.

And then additionally, going forward from here, I think their exact words was that the Bitcoin and cryptocurrency play was like the Achilles heel of Block right now.

JULIE HYMAN: Yeah. That's-- I mean, and I think investors are on the same page with that. The stock is down 65%, so.

BRAD SMITH: And well, on the point of sale side, too, because this is the Mizuho that also had praised the Afterpay acquisition for Block, for Square, Block. But then later on, it comes back to for point of sale specifically, where they're looking at some of the new incumbent competitors primarily in Apple. And Apple is now going to be dabbling more in the same space as Afterpay, as well as on the point of sale side with some of the Apple Pay transactions that they're looking at as they move forward.

JULIE HYMAN: I mean, I have to say, just on an anecdotal basis, when you check out in places, it used to be Square was the only game in town.

BRAD SMITH: Right.

JULIE HYMAN: And now I see Clover. I see some of the other point of sale machines.

BRAD SMITH: PayPal has theirs.

JULIE HYMAN: Yes, exactly. So there's a lot more competition--

BRAD SMITH: Absolutely.

JULIE HYMAN: --in that space, even as they're also suffering from that Achilles heel.