5 Rebounding Tech Stocks to Watch

3. Block, Inc. (NYSE:SQ)

Number of Hedge Fund Holders: 84

5-Day Percentage Increase in Share Price as of August 5: 19.34%

Block, Inc. (NYSE:SQ) is a California-based company that specializes in financial services and digital payments. The stock has rebounded 19.34% in the last 5 days as of August 5. Block, Inc. (NYSE:SQ) posted its financial results for the second quarter of 2022 on August 4, reporting EPS of $0.18 and revenue of $4.40 billion, outperforming the market’s consensus estimates by $0.02 and $69.5 million, respectively. 

On August 5, RBC Capital analyst Daniel Perlin raised the price target on Block, Inc. (NYSE:SQ) to $95 from $91 and maintained an ‘Outperform’ rating on the shares. The analyst cited Block, Inc. (NYSE:SQ)’s Q2 earnings beat and management’s slowing incremental investments, which should support Block, Inc. (NYSE:SQ)’s adjusted EBITDA.

According to Insider Monkey’s data, 84 hedge funds were bullish on Block, Inc. (NYSE:SQ) at the end of Q1 2022, compared to 96 funds in the earlier quarter. ARK Investment Management is the leading shareholder of the company with 8.30 million shares worth $1.12 billion. 

Here is what Farrer Wealth Advisors had to say about Block, Inc. (NYSE:SQ) in its Q1 2022 investor letter:

“Block (formerly Square): We ‘adopted’ Block’s stock after the company bought Afterpay, which we were investors in. We had been trimming the Afterpay position throughout 2021 and trimmed again after the acquisition, so the position was quite small. We held onto that small portion, as we did think the acquisition made sense and were excited to see the two companies integrate and for Block to create a closed loop network between merchants and consumers. However, the market punished most highly valued tech stocks over the last months, and we saw the position move against us by over 50%. We are firm believers that when a stock goes against you by 50%+, you need to do something about it. Either trim/sell and reinvest or buy more. In the case of Block, the original reason for holding was to see how the acquisition and integration with Afterpay panned out. The market did not give us the time to see this play out, thus we were not comfortable adding more to the position. Further for the stock to recover to our purchase price, we felt the company’s valuation would need to command a future exit multiple that the market would be unlikely to pay in this environment. Given this, we exited the remainder of the position.”