For Jack Dorsey Block, a Bitcoin payment company, has been downgraded among other companies associated with Bitcoin. Mizuho, an investment firm, downgraded Block from “buy” to “neutral” on Thursday due to the company’s management placing a high priority on Bitcoin despite the fact that it accounts for less than 5% of Block’s gross earnings.
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MicroStrategy, Coinbase, and Robinhood are just a few of the recent companies to receive downgrades as Bitcoin’s value drops.
Mizuho Analyst Downgrades Block Bitcoin Has Been the Center of Attention
On September 22nd, Dan Dolev, an analyst at Mizuho, lowered Block (SQ), the parent company of payment startup Square, from “buy” to “neutral.” The price objective has been reduced from $125 to $57 by the analyst. He attributes the demotion to the company’s newfound preoccupation with Bitcoin and user weariness with POS and layaway systems.
We feel user fatigue, plateauing inflows, loss of best-of-breed POS status, and BNPL [buy-now-pay-later] misexecution are impeding SQ’s growth after years of justly being called the most inventive name in Bitcoin payments.
At a time when the company’s stock was soaring above $200 last year due to the Bitcoin boom, an analyst at Mizuho gave the stock an outperform recommendation. Mizuho assured its clientele that, like JPMorgan, it has tremendous growth potential. The decline of Bitcoin, however, has hurt business results.
The price of Bitcoin has dropped by nearly 70% from its all-time high in November 2021, leading to downgrades for many companies, including MicroStrategy and Robinhood. MicroStrategy, Michael Saylor’s company, reported losses of almost $1 billion in its June financial report.
Along with other investment firms, downgraded Coinbase to “sell” after the cryptocurrency market crashed.
Dan Dolev, an analyst for Mizuho, is optimistic about Block’s prospects. However, there is cause for concern given management’s growing concentration on Bitcoin despite the fact that it contributed less than 5% of gross profit in the first half of 2022. Meanwhile, intensifying rivalry at the point of sale and among BNPL retailers is stifling expansion.
After a stock rating cut, Block’s share price fell over 6%, to $56.07 per share. This past week, Evercore ISI and SMBC Nikko Securities America both lowered their price targets for Block (SQ).
The Price of Bitcoin (BTC) Continues to Suffer Under $20,000
As a result of the robust U.S. dollar and other macro variables, Bitcoin’s (BTC) price has been stuck below the $20,000 mark. The Bitcoin price is $18,998 at the time of this writing, a decrease of over 1% over the past 24 hours.
Due to previous chart trends, popular analyst Rekt Capital thinks the Bitcoin price can actually fall below $15,000. Bitcoin’s value is predicted to drop below $15,000 soon.
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Source: Google Trend