Trading Strategies for Block (SQ) Stock Before And After Q4 Earnings

Block, Inc SQ was spiking up over 5% Thursday as the company heads into its fourth-quarter earnings print after the close.

When Block printed a third-quarter earnings beat on Nov. 2, the stock surged over 18% at one point the following day before settling to close 10% higher.

For that quarter, Block reported revenue of 5.62 billion, which beat the $5.441-billion consensus estimate. The company reported earnings per share of 55 cents, beating a consensus estimate of 47 cents.

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For the fourth quarter, analysts, on average, estimate Block will report earnings per share of 59 cents on revenues of $5.699 billion.

Ahead of the event, Wedbush analyst Moshe Katri raised the rating on Block from Neutral to Outperform and bumped up the price target from $70 to $90. Read More Here...

Traders and Investors looking to play the possible upside in Block stock but with diversification may choose to take a position in the AXS 2X Innovation ETF TARK. TARK is an actively managed double-leveraged ETF aiming to return 200% of the daily performance of Cathie Wood-led ARK Innovation ETF ARKK, the latter which holds a 6.02% weighting of Block.

For traders bearish on Block, AXS Short Innovation Daily ETF SARK is an actively managed ETF aiming to inversely track the daily performance of ARKK.

From a technical analysis perspective, Block’s stock looks neutral heading into the event, having been trading in a horizontal pattern since Jan. 3. It should be noted that holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat.

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The Block Chart: Block has been trading between the $62 and the $70 area since Jan. 3, mostly stuck under the 50-day simple moving average (SMA) and above the 200-day SMA. The 50-day SMA is trending above the 200-day, which indicates Block is trading in a bull cycle.

• On Wednesday, Block formed a lower low to negate its slight uptrend and printed a doji candlestick, indicating the local bottom had occurred. On Thursday, Block reacted to the doji candlestick, gapped up slightly higher and was working to print a bullish kicker candlestick.
• Bullish traders want to see Block receive a bullish reaction to its earnings print and for the stock to confirm Thursday’s bullish kicker candlestick by forming a second gap up on Friday, which could help negate the possible downtrend.
• Bearish traders want to see Block suffer a bearish reaction to its earnings and for the stock to fall under the $62 mark on Friday. If that happens, Thursday’s high-of-day will serve as a lower high to confirm Blok’s downtrend.
• Block has resistance above at $69.60 and at $78.19 and support below at $62.50 and at $53.97.

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