This 'Buy Now Pay Later' Stock Gets Downgraded Again Within A Week

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  • Mizuho analyst Dan Dolev downgraded Block, Inc SQ to Neutral from Buy with a price target of $57, down from $125. 
  • After years of being deemed the most innovative name in payments, "user fatigue, plateauing inflows, loss of the best-of-breed" point of sale status, and buy now pay later "misexecution" are blocking Block's growth, Dolev noted. 
  • Block "still has enormous potential, but it is not being realized." 
  • Also Read: Payment Firms Square, PayPal Get Widely Different Views In Eyes Of Wall Street Amid BNPL Woes, Juicy Margins
  • Instead, BNPL estimates continue to come down & projects like Bitcoin, which accounts for <5% of gross profit, seem to preoccupy management's attention disproportionately. 
  • He believes Block shares no longer deserve a premium valuation relative to the U.S. payments sector.
  • Recently Dolev recommended buying shares of Affirm Holdings, Inc AFRM on weakness following plans of a government crackdown on the BNPL sector.
  • Dolev considered the Consumer Financial Protection Bureau's buy now pay later report as "less harmful than feared." 
  • The "lack of a clear call for action is a positive," he noted.
  • Price Action: SQ shares traded lower by 5.97% at $55.90 on the last check Thursday.
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