KBW downgraded Block stock on Monday: find out why

KBW analyst now rates Block stock at market perform.
Steven Kwok still sees upside in “SQ” to $75 a share.
Block shares are currently down over 25% year-to-date.

Shares of Block Inc (NYSE: SQ) are trading down this morning after a KBW analyst downgraded the crypto company citing several “small risks”.

Block Stock could still climb to $75

Steven Kwok now rates the San Francisco-headquartered firm behind Cash App at “market perform”. His lowered price target of $75, though, still suggests about a 10% upside on its previous close.

The analyst finds Block stock a bit less attractive now that multiple risks are piling against it. His research note reads:

This big items revolve around rising competition within acquiring, and potential for regulatory scrutiny within its Cash App segment.

In February, Block Inc reported weaker-than-expected earnings for its fourth financial quarter.

Hindenburg has a short position in Block Inc

Kwok is not convinced that the company’s income from instant deposit fees or unregulated interchange are very dependable. Rising competition, he said in his research note, could also weigh on take rates, volume growth, and profitability.

Strength in its seller business is rooted in its in-store offering, and as more goods are sold online, this could shift purchase volume to marketplaces and eCommerce focused platforms like Shopify.

Last month, short seller Hindenburg Research also took aim at the crypto company, alleging that its Cash App has a lot of fake/duplicate accounts, many of which were involved in criminal activities.

Year-to-date, Block stock is down more than 25% at writing.